You Have To Have Stretchable Valuation Norms

NILESH SHAH, fund manager

Nilesh Shah is responsible for managing more than Rs 4,000 crore at Franklin Templeton Asset Management. As the chief investment officer he is responsible for the investment management of Templeton debt funds and Franklin equity funds in India.

His investment philosophy

We have three kinds of accounts in India. First is the family of Templeton equity funds that is well-known for its value investing, the second is the family of Franklin funds, renowned for its growth investing and the third is the home-grown family of Templeton debt funds. Each of these families has its own unique characteristics. However, there are common threads running across all our funds: a disciplined approach to investing, process orientation and conservative fund managers.

 

We identify companies that have been showing impressive growth rates both in terms of topline and bottomline. But we don't invest based just on quantitative factors. We look at qualitative factors as well. We buy stocks at prices we are comfortable with and hope that their value will grow in line with fundamentals in time.

Building his portfolio

Well, our starting point is making a macro economic call. This basically entails identifying the sectors to concentrate on. Once we have identified the sectors we need to concentrate on, we don't just go and invest all our funds in those sectors. As a mutual fund, we have to be conservative and remain adequately diversified. Our macro economic call, therefore, just leads us to be overweight on some sectors compared with the benchmark market index and underweight on others. This approach ensures that we do not go to either of the two extremes: being too aggressive or too conservative.

Then comes the