In 2023, a category III long-only AIF scheme run by Gurugram-based Siddharth Oberoi produced strong alpha for its high-net-worth clients. This is the Prudent Equity Ace Fund, which has gained 72.41 percent in the last year while the broader indices BSE SmallCap and BSE MidCap have gained 48 and 46 percent, respectively. The alternative investment fund (AIF) requires a minimum commitment of Rs 1 crore.
Strategy for Investment
The fund manager told Business Today that they practice bottom-up stock picking, which means focusing on individual companies rather than making a broad macro call. "The fund's investment philosophy remains the same as it has for the past 13 years." When we acquire a security, we look for three things: long-term growth, good corporate governance, and rational capital allocation. "If a company lacks any of these characteristics, we will not invest in it," Oberoi explained. The fund returned 47.24 percent over the last six months and 16.89 percent over the last three months.
Sectors and stocks
The portfolio manager also mentioned that the majority of their holdings are in the infrastructure sector. They have also made significant investments in banking and real estate industries. "We believe these sectors offer tremendous growth while also providing valuation comfort." "Our top allocations were Time Technoplast, Welspun Enterprises, Ramky Infrastructure, J Kumar Infraprojects, and Shriram Properties," stated a market observer.
The path ahead
Oberoi feels that 2024 would be a year of extreme instability. He claimed that Indian markets have been on an unbroken streak with no severe downturns. While prices remain high, profit growth is outpacing previous records, lending some validity to current market valuations. Oberoi is bullish on 2024 in general.
"We remain bullish on infrastructure, banking, renewable energy sector, and engineering," he stated of his favored areas. In addition, we have made significant investments in turnaround enterprises, notably debt restructuring stories. We are also involved in a number of unusual scenario opportunities. We feel that the Indian markets provide several chances for capital growth."
There will be Risks Ahead
Oberoi believes that valuations are difficult for investors at a time when markets are hanging near record highs. "Risk is a constant in the stock market, and because we cannot predict the macro environment, we will continue to focus on the company's specific risks." As a result, overvaluation remains the greatest risk. Interest rates are another consideration. Currently, the belief is that interest rates will eventually fall. "Any change in that would cause growth projections to go haywire," Oberoi explained.
