Bottom-up, stock-specific and research-oriented" is how the 40-year-old Vinay Kulkarni, senior fund manager - equities, Deutsche Asset Management Company, describes his investment approach.
He buys stocks that are undervalued - both absolutely and relatively. Kulkarni picks a stock only after he is satisfied and thoroughly convinced about its prospects.
"I do my due diligence extensively and then take a call. I believe in direct and frequent interaction with company management. This not only helps us in gaining an insight into the business operations of the company but also keeps us updated on the latest happenings in the sector. If I believe in a stock, I take big bets," he says with conviction.
Kulkarni has been with Deutsche AMC for the past eight months. Deutsche Alpha Equity Fund, one of the three funds he manages, has been one of the top performers in terms of returns over the past six months.
In fact, it tops the charts for returns generated in the past one-month and three-month periods.
"Each of the top five stocks in Alpha Equity Fund has more than 7 per cent weightage in the portfolio. Once I am convinced, I take big calls," Kulkarni says.
That the fund manager just does not believe in the contrarian approach towards investments comes to light as he says, "I am not a great contrarian. Nobody has made a lot of money by taking a contrarian call. The best ideas in investment are always the simplest ideas."
But at Deutsche, Kulkarni follows a more objective way of investment. The AMC uses 'Linker Thinker' -- a proprietory valuation tool to identify undervalued stocks.
This alumnus of Indian Institute of Technology-Bombay and Indian Institute of Management-Bangalore becomes really passionate when talks revolve around UTI Master Value and Deutsche Alpha Equity Fund.
He narrates: "These two funds are really close to my heart. Master Value was a five-year, close-ended small fund of Rs 110 crore (Rs 1.1 billion) when I started managing it in 2000. In February 2003, when it was converted into an open-ended scheme, its value was Rs 700 crore (Rs 7 billion). It has given 100 per cent dividends consistently for the past three years."
Kulkarni is very proud of one pick of his -- Siemens. "I met the company management and was very impressed with the opportunities in the sector. So, I bought huge quantities of the stock. I bought it for Rs 1,000 and today, its price is hovering around Rs 6,000."
After passing out from the IIT in 1988, Kulkarni worked as a software engineer for two years at Patni Computers. Then he joined the IIM, and started his career as a fund manager in 1992 at UTI where he managed UTI Equity Fund, UTI Master Value and UTI Mid-Cap. He says, "UTI was a good and highly successful learning ground for picking up undervalued stocks."
At Deutsche, Kulkarni manages Deutsche Alpha Equity Fund, Deutsche Tax Saving Fund and Deutsche Investment Opportunity.
But when he is not busy churning out returns for his unit holders, he loves to spend time with his family. Kulkarni calls himself homely and family-oriented. "I love spending time with my kids at home. I enjoy travelling with my family," he says with a smile.
Kulkarni likes reading books too. "I love to read books other than investment books - on general topics like travel and economy," he says.
He is very optimistic about the Indian economy. "While comparing the growth rate which the Indian economy and its leading sectors are expected to achieve with those of other emerging markets, India is truly a favoured destination," Kulkarni says.
Commenting on the markets, he says, "Seen with a historical perspective, the P/E does seem to be on the higher side, but it has not yet reached a stage where we can say that the market is overvalued. More and more global investors are keen on increasing their exposure to India. Going forward too, we will continue to see strong FII interest."
As far as domestic investors are concerned, Kulkarni feels: "The retail investor has finally discovered the benefits of investing in equity for the medium to long term. What we currently witness is just the beginning of the shift in preferences, from fixed income-oriented products to equity. More shift is expected from other asset classes to equities, going forward."
He is bullish on engineering, construction, metals - both ferrous and non-ferrous, cement and soft commodities such as sugar.
"We are currently underweight on technology but are hoping to increase its weightage at proper junctions. We would also be looking at banks that have underperformed, from a medium- to long-term perspective," Kulkarni says.
"Ninety-nine per cent of success comes from hard work done with a clear objective in mind. Only one per cent comes from what is popularly termed as 'luck'," is his mantra.
He wishes that the mutual fund industry focus on providing innovative products to retail investors and generate wealth for them on a long-term basis so that the investors do not have to worry about switching in short-term periods.
"Select your mutual fund with due diligence and stay invested for the long term -- two-three years or even beyond" is what Kulkarni's advice to retail investors is.
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