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Daftary among top 5 mutual fund managers

Ela Dutt in New York

Barron's Online, the prestigious financial magazine, on Monday named Manu Daftary of DG Capital and Quaker Financial Advisors, among the top five in its list of best mutual fund managers.

While the market downturn had hit almost everyone, it also brought people like Daftary to the fore. He manages the Quaker Aggressive Growth Fund, that skirted losses and maintained value for investors by not getting carried away by the dot-com tidal wave.

"The market's shift wasn't bad news for everyone. It helped value investors, and put the spotlight on a small number of gifted fund helmsmen who've outpaced their peers both in the go-go growth market of the late nineties and the grind-it-out market of today," said Barron's Online, the electronic edition of Dow Jones & Company's business and financial weekly magazine.

Daftary, a graduate of Elphinstone College, Bombay, was the only manager to earn a top-five spot both this year and last year.

"He accomplished that feat by going from optical-networking believer to skeptic -- in a hurry," the magazine noted. Daftary is quoted as saying, "A lot of managers got caught with their pants down. We just kind of side-stepped that bubble-break."

Daftary used the unique tactic of moving 70 per cent of his portfolio into cash, around this time last year, "a hugely bearish call," on the stock market. He believes the negative news in the market will continue at least till October and until that time he intends holding back from putting more money into stocks.

Meanwhile, he favours fast-growing companies with less expensive shares, which he believes have a higher chance of getting positive growth. His favoured companies include Johnson & Johnson, EDS (Electronic Data Systems) and Viacom. EDS has claimed it has a backlog in orders of up to $83 billion.

Daftary is the president and chief investment officer of DG Capital Management, which he founded in 1996. He is also portfolio manager for Quaker Aggressive Growth Fund. He began as a money manager 16 years ago when he was chief investment officer at the University of Southern California. In 1988, he joined Geewax, Terker & Company where he was a co-manager of institutional growth stock portfolios and short-selling strategies. In 1993 he joined Hellman, Jordan Management Company as senior vice president and portfolio manager. Between Hellman and setting up DG Capital, he was briefly with Greenville Capital Management.

He has an MBA from the California State University at Long Beach and is a chartered financial analyst.

The growth fund he manages typically holds about 125 to 200 stocks that seem to have strong fundamentals and earnings growth. The fund is focused mainly on long-term investment.

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