Large-cap, small cap or ETFs. Which investment strategy can give a push to your portfolio when it comes to generating alpha in this highly volatile market? The theme was discussed today in a panel discussion with Raamdeo Agrawal, chairman and co-founder, Motilal Oswal, Shankar Sharma, founder, GQuant Investech and Nikhil Kamath, co-founder, True Beacon & Zerodha. The session was moderated by Udayan Mukherjee, Global Business Editor, India Today Group at BT Market Today Summit held in Mumbai. The topic of the panel discussion was “Chasing Alpha in a VUCA World”.
While discussing the volatility Raamdeo Agrawal said the stock prices in the last 5-7 years have become absolutely absurd. He also added that the most coveted blue-chip stocks of next 1-2 years will be PSU banks because the credit cycle is rising and PSU Banks can report up to Rs 1 lakh crore profit in 2025.
Talking about his mistakes, he regrets buying Zomato. ”Fund managers were sitting on my head to get Zomato stock, which I regret in hindsight,” said Raamdeo Agrawal.
On active or passive strategy Nikhil Kamath said it is quite hard for active funds to outperform passive funds. Active funding will outperform passive funding in next 2-3 years, but not long-term. He also mentioned that they have reduced equity allocation to 37%, increased gold allocation to 15% and the rest is debt. “Meta looks more attractive to me than most Indian tech stories because they are spending a lot on research,” added Nikhil Kamath.
On start-ups, he mentioned that startups are yet to witness tough times in terms of raising money at the valuation of last year.
Shankar Sharma said small cap is the place where money will get made. “Small-caps will make money because the days of HDFC Bank and Asian Paints making money for investors are over. Investing in small-caps is like entering the mafia, easy to enter but impossible to exit. It’s an under-appreciated skill to get the bear market right and the next one is away by a few years,” said Shankar Sharma.
He also mentioned that Adani stocks couldn’t be held by funds, because no fund manager will be able to justify them to the shareholders if the stocks fell.