Mfg, digitisation, realty to drive returns next 3-5 years: Aditya Birla AMC

Aditya Birla Sun Life Asset Management Company (AMC) has said manufacturing, digitisation, sustainability, revival in the real estate sector and resurgence in mid and small caps are the key themes that will drive returns over the next three to five years.

The asset manager says spotting the trend during various market cycles is the key for identifying opportunities.

“We believe that the key to successful investing over a long period is an ability to spot trends. Looking at data since 2002, the top five performing sectors vary greatly in each market cycle. The variation in returns among the best and worst performing industries during a cycle is too large, again underscoring the importance of picking the right themes,” said A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC.

The Alternate Assets Equity Investments team of the asset manager has analysed the big trends that have played out over the last couple of decades and have identified the key enablers of any big structural trends for the future.

During the period of 2003-08 there was an infrastructure driven boost to gross domestic product (GDP) growth. While in the period between 2011-15 there was resurgence of export sectors followed by consumption story between 2016-20.

Fund house is bullish on manufacturing due to a mix of push and pull factors that will drive manufacturing in India like Atmanirbhar Bharat & vocal for local initiatives by the government, along with diversification of global supply chains.

While digitisation can transform India’s economy and newly digitised sectors will see value emergence. Fund house also believes that there will be cyclical revival in real estate and price improvement due to the lower supply and reducing inventory.

The fund house believes mid- and small-caps stocks can continue to outperform large caps led by economic recovery, lower interest rates and increased representation in emerging sectors like chemical digital platform among others.