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Fund Manager Insight: Anoop Bhaskar, Head-Equity, UTI Mutual Fund
October 1, 2015

Anoop Bhaskar answers our questions on UTI Transportation and Logistics Fund.


Author : iFAST Research



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"During the last 1.5 years, UTI Transportation and Logistics Fund has been a topic of discussion among our investors. In this scenario, we decided to speak to Anoop Bhaskar, Head-Equity at UTI Mutual Fund to get a better understanding on how he has been managing this fund since taking over this portfolio in 2007. A glance through the interview clearly shows the fund manager's comfort in managing a sector fund, wherein he barely has any peer set to compete with.."

Anoop Bhaskar

Mr. Anoop Bhaskar, Head-Equity UTI Mutual Fund

Q. 1.UTI Transportation and Logistics Fund has been slowly gaining investor traction since the past 1.5 years. Being at the helm of this fund since 2007, can you take us through the basic investment strategy that you have been following?

A. We have been following a bottom up approach to managing this fund by identifying opportunities across the wide spectrum of companies engaged in auto, auto ancillaries, transport infrastructure and logistics sectors. We have been focusing on companies, which are able to consistently generate free cash flow and healthy return ratios through cycles. The fund will continue to look for new opportunities within the above mentioned sectors.

Q. 2. According to you, which are the sectors that would ideally come under the theme of “Transportation and Logistics”?

A. Auto Original Equipment Manufacturers (OEMs), Auto OEM suppliers, Auto replacement market suppliers, companies engaged in transportation infrastructure and logistics services

Q. 3. Between Logistics and Auto & Auto Ancillaries, which sector are you more positive about and why?

A. We are positive on both the sectors as we see a number of opportunities emerging across the spectrum over the next few years.

Q.4.Would the portfolio be susceptible to macro-economic risks such as currency fluctuation and economic recovery

A. Yes, the portfolio will be susceptible to both the above factors. However we have tried to minimize the impact of the above factors by having a judicious mix of companies which would gain on account of currency depreciation/domestic economic recovery and vice versa.

Q. 5. In your opinion, is the Modi Government supportive of the sectors that form a part of this portfolio? If yes then what are the initiatives that have already been implemented since the past 1 year?

A. The sectoral theme per se benefits from the overall improvement in the economy. The government has already taken a few initiatives that would benefit the overall economy in the medium to long term and in turn the underlying sectors of the fund.

Q. 6. A glance through your portfolio shows that Maruti Suzuki India has been among the top 5 picks of this fund during the entire 36 months of analysis (August 2012-July 2015). What is your take on the same?

A. We like the company for its strong brand franchise in India’s small car market. Additionally the company has been able to move up the pricing curve with their brands in mid range vehicles also showing signs of traction resulting in the company’s improvement in overall market share over the last few years. This along with favorable currency movement has resulted in superior earnings growth, which we believe will continue in the medium term.

Q. 7.Amtek Auto has been in the news recently on account of the downgrade of its bond from A+ to C. During our 36 months of study, this stock has been a part of your portfolio and the allocation has gradually reduced from 1.43% in August 2012 to 0.43% in July 2015. Could you tell us the reason as to why this stock was made a part of the portfolio in February 2010 and why you have exited from this stock in August 2015?

A. Amtek Auto is one of the largest suppliers of casting and forgings to the Indian automotive industry. We were of the view that if growth were to return, the company would be a beneficiary of a favourable economic cycle, which would help it to deleverage its balance sheet. Additionally, the stock was trading at an attractive valuation at the time and hence we had taken a limited exposure. However as time passed, the company made a few international acquisitions that led to leverage which prompted us to exit the stock as the risk reward was not favourable.

Q. 8. Can you give us three points as to why our investors should start considering an exposure in this fund?

A. The fund is a sectoral fund and has the risk associated with a sectoral fund. Hence investors should take a measured exposure to the fund dependent on their risk profile and overall portfolio.

DISCLAIMER
iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund’s offer document/scheme additional information/scheme information document. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice.
Mutual Fund investments are subject to market risks. Please read all scheme related documents carefully.

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