Markets often tend to reward those who have the right temperament rather than just intelligence. The challenge, however, is how to avoid the temptation and stay calm when the entire market is in a frenzy. Franklin Templeton’s Anand Radhakrishnan has mastered that fine art.
During the famous tech bubble, when he was managing a fund at Sundaram Mutual Fund, Radhakrishnan underperformed his peers for almost two years. Most fund managers had bet heavily on the tech sector. In fact, some funds even had an exposure as high as 60% to the sector while Radhakrishnan had capped the fund’s exposure at 30%. “We chose to remain invested in quality tech companies. It was a difficult thing to do when the rest of the market was doing well. But my boss kept telling me not to worry, these valuations are not sustainable. It is okay even if you manage the funds conservatively, but do not take the risk,” recalls Radhakrishnan. Once the tech bubble burst, the Sensex fell from 5,500 to 2,900, a fall of nearly 50%. His fund fell by about 40% which was still reasonable considering most other funds fell by more than 70%.
At Sundaram, Radhakrishnan’s boss Shreekant Pandey came from its then joint venture partner BNP Paribas. “Pandey was a pension fund manager at Bell Canada. He used to talk to me about the Japanese market bubble and what kind of mistakes people made. He had the experience of investing in global markets and had seen many bubbles bursting,” says Radhakrishnan. Japan went through a big boom from 1982 to 1990 when the market hit a high of 39,000. At 19,000 today, the index is a far cry from its all-time high. “He used to say if you are stuck with the wrong stocks in a bubble, you may never be able to recover your money even after a long period of time. Those kind of examples were really useful. He was a great teacher and I was very lucky to have him as a boss for almost seven years,” adds Radhakrishnan. In 2004, Radhakrishnan left Sundaram to join Franklin Templeton. As CIO, he now manages some of their flagship funds such as Bluechip, Prima Plus and Infotech Fund.
Radhakrishnan considers himself to be a conservative investor who stays away from taking undue risks. Not without reason. All through his investing journey, he has seen how greed had destroyed many a portf