No redemptions in our small, midcap schemes: Rahul Agarwal, Bandhan AMC

Stock Market News: Investors have shown maturity till now and have continued to put faith in equities' long term potential

Despite the current stock market correction, RAHUL AGARWAL, VP – Equities at Bandhan AMC, believes investors have shown maturity by, largely, sticking with equity investing as a long-term wealth creation strategy. His Fund -- Bandhan Core Equity Fund -- however, has increased its cash position slightly since October 2024 to protect investors' money. In an email interview with Nikita Vashisht, Agarwal shares his insights into how he has navigated the current market scenario, the secret behind his Fund's outperformance, and top stocks and sectors that are on his radar. Edited excerpts:

 

How have you navigated the recent market correction?

Post the union elections last year, we made a pivot in the fund by increasing the High Growth and Quality basket while reducing the Thematic and Value basket. Our focus in the current correction has been to reduce smallcaps and remain at the regulatory limit on midcaps. Within smallcaps, we have concentrated more on non-cyclical companies. We have also increased our exposure towards midcap financials. 

 

We, also, selectively increased some commodities exposure where valuations had reached a comfortable level while reducing positions in information technology (IT) stocks. Pharma and healthcare sector has been a major part of our fund in the last six months, and we continue to maintain the same.

 

Have MF schemes across Bandhan MF's portfolio, especially in the SMID segment, seen major redemption/pause in SIPs?

We have not seen any redemptions in our small, midcap schemes. On the other hand, we have seen inflows even till the last month in our midcap and smallcap schemes.

 

What's your average cash position across schemes now as compared to September/ October 2024? By when will you start deploying it? Any sectors on your watchlist?

We are maintaining cash around 8 per cent in the fund, which was previously closer to 5 per cent. However, if you add some of the megacaps which are more cash proxies in our view, then we were running high cash and cash proxy positions in the fund. We have selectively started deploying in certain non-cyclical smallcaps where valuations have reached comfortable levels, and also in certain thematic areas which can be beneficiaries of the current global changes.

 

Are you seeing investors shifting towards debt/other asset classes than equities amid the current turmoil?

Investors have shown maturity till now and have continued to put faith in equities' long term potential. They also acknowledge the need for such healthy corrections in the market which paves way for better returns over the long term.

 

Do you think we are near the end of the market correction and valuations are attractive to bottom fish?

There has been a decent correction on both multiples as well as elevated earnings expectations in the last four months. On both the aspects of liquidity and earning expectations, we now have select companies which have reached attractive levels. However, we need to keep a very close eye on the changes being brought by US President Donald Trump which will impact all sectors globally. 

 

Bandhan Core Equity Fund has consistently outperformed its benchmark, Nifty Large & Midcap 250 TRI, across 1, 3, and 5-year periods. What has been your fund management strategy?

Bandhan Core Equity Fund is managed with three key philosophies - Dynamism, Anti-fragility, and Macro. The focus towards macro helps us in identifying the bigger picture, while the guardrail of anti-fragility prevents us from going overboard on one particular theme in the market. This dynamic nature has helped us navigate the choppy waters in the last couple of years. In terms of the portfolio construction, we monitor the fund construction on a monthly basis and recalibrate the same to make sure no style bias comes in the fund.

 

The success of our fund can be attributed to our investing strategy and philosophy which enables us to change our allocation from High growth stocks to Value stocks and then back into Growth sectors. Internet companies, Pharma, select Financials, Auto, and Capital Good companies have been the major sectors where we have created the most alpha in the last few years.

 

Which type of schemes / funds should investors look at now?

In the current market, schemes which are diversified in both sectors and stocks along with a fair weight across market cap would be preferred. A category like Large and Midcap is a favorable category and perfect fit in market downtrends. They give Nifty like protection but, with a trend change, the upside can also be significant.