Though the fund's investment mandate is one of a"go-anywhere" kind in terms of market-cap and sector allocations, in practice it sticks to a large-cap orientation. Ever since launch, Kothari has allocated over 65 per cent to these. Among sector plays, his preference for banking is obvious.
The fund's popularity shot up after its performance in 2008, when it was among the few that managed to contain downsides despite being fully invested. The large-cap bias that came to its aid proved to be the chink in its armour when the market began rallying in March 2009 and mid-cap and small-cap stocks galloped ahead. Such market movements do not hinder Kothari's individual style. "The investment process does not start with amarket cap bias," explains Kothari. "While looking at various investment options, I keep the liquidity risk in mind. While I do not bucket investments in mid- or large-cap, if I get 30 per cent returns without taking liquidity risk and a mid-cap offers 40 per cent return, I would opt for the largercap company." Kothari has been known to invest in stocks that are less popular among his peers and hold on to these for the long term. "Understanding how the business makes money, what is the scalability of the business, what is the management's track record and execution capability and the value we should pay for such business are the key elements of my investment process," he says.
What you can expect is a diversified portfolio, low individual stock bets and no undue risks, with a clear focus on bottom-up stock picking and comfort in valuations.
