Mr. Manish Gunwani
Fund Manager - CIO - Equity Investments, Nippon India Mutual Fund
Manish Gunwani is CIO - Equity Investments at Nippon India Mutual Fund. Manish graduated from IIT Chennai with a B.Tech and has a Post Graduate Diploma in Management from IIM Bangalore.
Manish has over 21 years of work experience primarily in equities spanning roles in equity research and fund management. He has also co-founded a technology company in the document management space.
During his stint at ICICI Prudential AMC, he managed two flagship funds of the mutual fund whose assets grew from $1bn to $5bn in 5 years. One of the funds grew from $50m to $3bn becoming the second largest fund in the industry. As deputy CIO he was instrumental in various aspects of asset management including setting up research processes, product strategy, developing talent of the team etc.
Manish has immense experience in equity research and has also spent two years working in a portfolio management company whose focus was midcaps.
Having traveled extensively across the world, Manish has attended many global investment conferences and seminars
Q1. What do you think of the market structure right now because there are just so many moving parts which continue to impact us – inflation, dollar index. How are you going to account for these factors?
We believe the global economy will continue to face challenging times for next few quarters. The attention is likely to shift from interest rates which may be close to peaking out to economic and profit growth as the impact of fiscal and monetary tightening percolates in the economy. Inflation also may be close to peak print – however while interest rates may be close to peak, they may remain near the current levels for quite some time which can lead to tighter liquidity conditions. Our portfolios are largely focused on themes which are aligned to domestic economy and the attempt is to identify opportunities where growth expectations are low at this point of time.
Q2. Given the fears of recession in the West, what impact do you anticipate on the Indian economy?
The impact on Indian economy typically happens through 2 channels – trade and capital flows. Till now the Indian economy has not felt the impact too much of the slowdown in global economy as domestic consumption especially in the mass affluent category has been strong and capex has picked up from small base. However if the global economy continues to slow down further there is likely to be impact across the Indian economy. Capital flows are also likely to be affected as liquidity is expected to remain tight.
Q3. Many financial advisors advise against investing in equity after the age of 60. What is your rationale behind keeping someone invested in equity post 60?
Usually Asset Allocation Plans are determined based on key factors like Risk appetite, time horizon, return expectations etc. It’s a common misconception/perception that equities can be highly volatile and hence may not be suitable for investors with conservative risk appetite. Interestingly it has been observed that ‘Equity Risk ‘significantly tapers off over a period of time. Based on a rolling return analysis of S&P BSE Sensex over last 40 years it was observed that the probability of witnessing a negative return over 10 year period is less than 1%. Further all of us understand that ‘Inflation’ is a silent killer which can erode the portfolio value and a holistic asset allocation plan attempts to generate superior inflation adjusted return. Equities is one of the few asset classes which has consistently delivered better inflation adjusted returns over the medium to long term.
So in our view based on the above factors long term investors can consider some equity allocations in their portfolio based on their risk tolerance and return expectation.
Q4. Should one diversify into various asset classes like gold, silver, and so on? Is it feasible for small investors to diversify across asset classes?
Winners across asset categories (Equity, Debt, Precious Metals etc) keep changing on a regular basis and predicting future winner is highly impossible. Investing across multiple asset classes with low correlation can potentially deliver a smoother investment experience across macro/market conditions as different asset classes undergo different market cycles and thus helps to optimise the portfolio risk.
Retail investors can participate in precious metals through Gold and/or Silver Exchange Traded Funds through the stock exchanged or through Fund of Funds investing in these ETFs. The minimum investment requirements for the Fund of Funds are very reasonable along with all the convenience of a MF scheme. Thus even small investors can consider diversifying across different asset classes which can potentially aid in a better investment experience.
Q5. Has IT become cheap because there is a challenge in terms of the big picture?Are you also tempted to reduce exposure to IT?
Generally we have been underweight IT but given the correction in sector it is becoming more attractive at the margin. The US economy seems to have weathered the monetary tightening phase reasonably well and while we expect the global economy to remain challenged going forward the worst of the monetary tightening phase seems to be behind us. Also recent depreciation in rupee has improved the outlook of the IT sector.
Q6. What are your expectations from the mid and small cap space?
From a medium to long term perspective we expect the mid and smallcap space to outperform the headline index as India is likely to enjoy high nominal GDP growth for many years which can aid lot of small and midcap stocks to compound earnings for a long time. Periodically the segment may see volatility given the lower liquidity but we are structurally positive on this segment.