2017 has been an important milestone for Neelesh Surana, CIO (equities) of Mirae Asset Mutual Fund, and the ten-year best performer in the Outlook Business-Value Research Annual Ranking of Fund Managers. His average annual return during the past decade has been 17.18% against the benchmark Nifty's average annual return of 5.54%. The assets under management for his India Opportunities Fund increased from Rs.103 crore in 2008, when he joined, to Rs.5,357 crore by the end of 2017. Surana is unassuming about his success and believes that the remarkable feat is a team effort. While his perennial aim is to deliver the magical alpha, Surana isn’t afraid to venture against the tide and take contrarian bets. He dwells on what 2018 has in store, where he is placing his bets and investment principles that will continue to guide his decisions going forward.
You are betting on consumption as one of the themes that will play out in the next couple of years? What are the factors driving the bet?
The consumer discretionary theme is an interesting space. In the near term, pay commission hikes, and good monsoons should help revive demand. In the long-term, structural drivers are related to favourable demographics, rising per capita income, and increase in urbanisation will help sustain demand.
So, if you look at our portfolio we continue to have a large bias towards consumer discretionary including auto, media, retailers, banking and financial services.
The problem with some of the consumer stocks from an investment perspective is that you don’t always get them very cheap. But for any company which has a moat in terms of barriers to entry, distribution or a good franchise in terms of market share, there is a strong tailwind both in the near-term and longer term. In the near-term, there could be a significant tailwind due to the shift from the unorganised to organised sector which hasn’t fully played out yet. The caveat, how