Set exposure limits on stocks
Feb 12 2017
A large part of Sridhar’s career, close to two decades, was at UTI AMC, where he saw through the transformation of UTI Mutual Fund, looking after assets under management (AUM) of over Rs 4,8000 crore (over $10 billion then). Sridhar was instrumental in bringing about significant changes at UTI Mutual Fund in fields like fund management and investment-monitoring systems, with a focus on cost control, performance-based pay and checks and balances. Against a centralised decision-making process in which the powers were concentrated in a few hands, Sridhar decentralised decision-making by bringing in specific fund managers for each fund. Sridhar adopted a five-layer structure—advisory, fund management, dealing, back-office and compliance/audit. Each had complete independence and reported directly to the CEO. Such a structure was missing at other fund houses in India.
After the market crash in early 2000s, Sridhar’s vision and efforts helped navigate UTI’s investments in the turbulent times. In 2000, he took a call of investing in Crisil in its early days and remained invested, which mad good gains. He also rightly predicted the higher valuations in 2007-08 and safely moved to other asset classes just before the market crash.
Sridhar has also been the chief executive officer of UTI International (Singapore), an investment management company managing international funds and multi-currencies.
Sridhar does an initial screening of growth momentum and valuations to choose his stocks. “Based on this, we create a portfolio. Then in terms of timing and liquidity in the system, we decide on the asset allocation. That is the basic framework.”
Sridhar also looks at the ability of the people managing the business. “How committed they are and how well they have managed the business during the best and the worst of times.”
Before investing in a company, his team will study the track record of the firm for 10 previous years or more, along with that of its promoters and management team. Sridhar is religious about creating a model portfolio for each investment theme. Currently, there are four themes—large- cap growth-oriented; small-cap and mid-cap; actively managed, with a higher portfolio turnover ratio; and value fund, which looks at attractive valuation stocks that could become long-term multibaggers.
His take on investing
Investors have to systematically save regular amounts . They should also have an investment advisor to guide them.