You do not create wealth in a day or two. You must be persistent and ensure that you invest only in quality and growth-oriented companies. Shreyash Devalkar, Senior Fund Manager, Axis Mutual Fund advises looking at companies that have performed steading even in rough markets.
He joined the AMC in 2016 and took over the responsibility of managing important funds like Bluechip Fund, Midcap Fund, followed by Multicap Fund in 2017. Prior to this, he was associated with BNP Paribas AMC as a Fund Manager for more than 5 years.
Devalkar has also worked as a Research Analyst at IDFC Asset Management Company (July 2008 to Jan 2011) and IDFC Securities (Sept 2005 to July 2008) set the pace for his continued success at Axis Mutual Fund.
|Mutual Funds managed by Shreyash Devalkar|
|Axis Equity Advantage Fund - Series 2||FMP - Hybrid||43.0||51.50|
|Axis Flexicap Fund||Multi Cap||48.8||55.7|
|Axis Equity Hybrid||Aggressive Hybrid||40.0||48.2|
A long-term view of the markets mandates anticipating growth through compounding. Due to macro factors, you may witness sudden growth in a year or two. However, you must not pick your stocks randomly. Timely stock picking can help your portfolio grow more than expected. This is true, especially, for commodity stocks that can turn into multi-baggers within a short period.
Steady returns are possible only with investments in structurally strong stocks showing structural growth. Also, one must ensure that stock portfolios grow at a higher rate than the country’s nominal GDP to experience continued wealth creation.
Important checks before investing
There are factors beyond valuation, profits and growth potential that you must check before investing in them. Qualitative elements such as company management, governance, etc matter more than quantitative factors. Check for essential elements like high return on equity (ROE), low leverage and free cash flow to profits after taxes to gauge the quality of a business. The P/E multiple that a company earns underscores the validity of these quantitative parameters.
Management quality matters
Focus on disruption that leads to innovation. This is a must to avoid investing in the wrong kinds of stocks. Quality and growth come at a price, so do not be surprised if these stocks are highly valued or seem overpriced. It is ultimately disruption that will help reduce the prices of these stocks. Since disruptions follow technological innovations, you must check if the companies in your portfolio are agile enough to adapt to tech change.
Valuations of companies unable to induce technological changes can take a significant hit. You must be aware of news and developments citing disruptions in technologies adopted by various companies. This is unbiased because the sudden onset of pandemics or wars due to geopolitical tensions may make it difficult to value companies sometimes.
Accounting for the unaccounted
Investments continue irrespective of geopolitical or pandemic-related disruptions. Most drastic investment decisions have resulted from changed economic policies in the past few years. Some disruptions are difficult to predict, thus, requiring us to take such unforeseen events in our stride before deciding where to put our money for future growth.
Devalkar's experience spanning more than a decade includes the understanding to look beyond valuation and price while investing in stocks. A long-term view necessitates the idea of relooking at the growth outlook of your portfolio companies from time to time. You will always find great businesses and multi-bagger companies if you keep your eye on the market long enough.