Mr. Aakash Manghani Fund Manager - Equities at Trust AMC.

He brings with him a wealth of experience and expertise in the role. In his previous capacity as a Manager at ICICI Prudential Life Insurance, Aakash managed a 6,500 crores portfolio in AUM, specializing in Flexi Cap and midcap strategies.

Before his tenure at ICICI Prudential Life Insurance, Aakash managed funds focused on ELSS and small-cap categories in BOI AXA Mutual Fund. Under his stewardship, these funds consistently outperformed the market, generating significant alpha and maintaining a top-quartile ranking. With an impressive track record spanning over fourteen years in the investment space,

Aakash Manghani is renowned for his adept stock selection abilities, steadfast investment style, and proactive fund management approach. Renowned for his keen eye for spotting lucrative opportunities, Aakash has consistently propelled growth for the portfolios under his management. Aakash’s strategic investment decisions have earned him acclaim as a dynamic and accomplished figure within the asset management industry.

Here’s Moneyedge in conversation with Aakash Manghani

For a mutual fund, three things matter the most - the promoters, the fund manager, and the investment philosophy. We believe that we have the optimal combination of all three.

Our promoters, Utpal Sheth and Nipa Seth are experts in equity and debt markets respectively and very few people understand these asset classes like them.

I come with a vast amount of institutional money management expertise and a long track record. Our biggest differentiator is our investment philosophy. We are growth investors at heart and believe in “Growth at Reasonable Valuations (GARV)”. But within growth investing, our North Star is Terminal Value (TV) Investing which can potentially create long-term wealth for our investors. Our Leadership, Intangibles, Megatrends (LIM) framework helps us to spot potential Gorilla companies i.e. companies with high Terminal Value. Our pursuit would be to spot companies which are rare, dominant, unchallenged, and long-lasting, like the mighty gorillas of the wild. Our TV approach gives us the Conviction, Patience, and Wisdom to capture the full value creation over the short term and the long term. This sets us apart from the other players in the asset management space.

Please elaborate in short, your fund management and risk management framework

In addition to our distinctive investment philosophy, our stock selection process is also one of the distinguishing factors. Our investible universe comprises 1000 companies which have a market capitalization exceeding 2000 Crores. From this universe, we employ multiple filters to curate a focused portfolio of stocks. Initially, Growth and Quality filters, along with quantitative screeners, are our schemes. Subsequently, GARV and TV filters are applied to these shortlisted companies as the second filter to identify the 40 – 60 stocks that will comprise the portfolio of our schemes.

We are agnostic to sector and market caps, and will endeavour to optimize opportunities across the spectrum. For risk management, we will be bench-mark-aware without being benchmark- hugging. We are all for taking active bets against the benchmark with prudence. So, sector or stock underweight/ overweight will be seen in light of the overall portfolio and targeted outperformance. Initially, as our corpus will be relatively modest in size, we do not see much liquidity risk.

Please help us with your views on the current equity market scenario

On the domestic front, Indian macroeconomic conditions appear steady. The only concern is the slower-than-expected recovery on the rural side. With core CPI reading well below 4% and healthy growth, no negative triggers are expected from the RBI or other policymakers. Markets are likely to experience some volatility due to swings in the US yields and continued geo-political uncertainties.

India’s macros are conducive and are expected to deliver the highest growth among large economies. The risk variables like fiscal, current account deficit, and currency deficit are well under control.

The construction cycle is already underway with a rise in government infra-spending and real estate upturn. Corporate balance sheets and banks are in great shape laying a platform for a private capex cycle. Consumer sentiment is the key monitorable in the near term.

We are positive on Indian equities due to strong corporate earnings, growing demand, sustainable margins (thanks to muted inflation), and strong equity flows from FIIs and DIIs. India’s relative position among most major economies is the strongest it has been in a long time. While large-cap valuations are above long-term levels, we believe that these can be sustained based on strong liquidity and continuing global strength.

The themes we are positive about for the next few years are manufacturing, renewables, digitization, infrastructure, urbanization, premium consumption, and the financialization of savings.

What makes Indian equity markets a sweet spot for global and domestic investors?

Indian equity markets have shown some resilience in the recent past. Thanks to the moderating inflation expectations, which is down from the peak seen in the past 18 months, India seems to have fared well compared to the most developed nations. GDP growth forecasts for most developed countries and China have been reduced in the past few months, but India is expected to grow the fastest at ~7.6%. In contrast to the global situation, growth expectations for India remain stable, and we are likely to be the fastest-growing large economy in the world in 2024.

Consumption, while still K-shaped, is robust and investments are likely to pick up further as the private sector reaches high-capacity utilisation. This year has seen excellent growth in corporate earnings and the market expects another good year in 2024, with earnings growth of 15% for Nifty 50 companies.

Valuations of large-cap stocks are still reasonable once we adjust for earnings growth. Some mid-cap and small-cap stocks may have run a bit too far, but that need not mean that the whole segment is expensive. The mid-cap and small-cap space will remain a stock pickers’ canvas as most of the new and exciting sectors, where we expect high growth, are represented only in the mid and small-caps. All in all, the India story is intact.

What about your first Equity offering Trust Flexicap Fund? What investors can expect from it?

Our first Equity offering – TRUST MF Flexi Cap Fund is a fund in the Flexi Cap category. It aims to provide investors with capital appreciation by investing in a diversified portfolio of equity and equity-related instruments. The fund will predominantly invest a minimum of 65% dynamically into Indian equity and equity-related instruments across market capitalization, namely, large-cap, mid-cap, and small-cap as defined by SEBI from time to time. Our stock selection framework will seek to add value through our differentiated insights or our variant perceptions of stocks and sectors. We will evaluate investment opportunities, taking into account:

  • Leadership potential of the company
  • Intangibles and other intrinsic edges that the company possesses.
  • Megatrends in the environment and economy
  • Longevity of the business model and growth trajectory. We believe that such companies could potentially generate wealth for our investors.

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