Latest news with #SandeepTandon
Time of India
12-05-2025
- Business
- Time of India
What does Sandeep Tandon predict for India's bull market amid global economic changes?
Quant Mutual Fund 's CIO, Sandeep Tandon , believes the Indian market remains in a bull run, albeit a challenging phase. While the US is in a risk-off phase, India shows early signs of risk-on reversal, driven by relative safety in currency, macroeconomics, and corporate strength. India's leadership in peaking and bottoming out positions it as a leader in the current rally. The focus is on domestic stories and generic pharma. Unexpected things are happening everywhere. Tariffs are getting solved. The geopolitical tensions make it look like we are at the end of this cycle; earnings season is ending. FII selling is ending. Lots of cycles are ending. I hope the bull market cycle is not ending. Sandeep Tandon : No, we are still in a bull run. However, the easy phase of bull run is over. We are in a decisive phase of the bull run. We are in a decisive bull run, but within that, we are in a difficult phase of the bull run. Now, let us look at India. India right now is in a risk-on phase. where the US is in a risk-off phase. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Moose Approaches Girl At Bus Stop In Northern Samar - Watch What Happens Happy in Shape Undo Right from January, the US came into a risk-off phase. We are in a very unique situation where money will flow to India. In the last 15 trading or 20 trading sessions, the FII flow has been constructive. The moment the US investors become slightly jittery about the US, money will move out and this was our thesis in 2025, that the decoupling process will start, maybe by July. I was linking with the dollar cycle peaking out and the decoupling starting, but that process has already begun. What it means is that people are looking for safety. Even European investors are pulling out from the US. In the US, we have seen extraordinary cross border flows in the last many years. I think that cycle has peaked out. If 10% money shifts from the US to Asia-centred emerging markets, there will be a tsunami out here . The last fact sheet we wrote is not that bad for emerging markets. It is good for India. In fact, look at the beginning of the year, best of the strategists were bullish on the US. They wrote off emerging markets completely. Now the reverse has started. The US has peaked out. We said in January that the US will correct 15% to 20%, particularly since Nasdaq has already corrected. Maybe we can see a small pullback rally, but the ugly face of the next level of fall is still pending in the US. Live Events You Might Also Like: Will the escalating India-Pakistan conflict continue to rattle stock market? Why do you call India a risk on? Is it purely because of the valuations or are there other macro parameters which make you feel so? Sandeep Tandon: Yes, it is a macro parameter. Last year, in July 2024, we were very early to say it is a risk-off phase for India because macro, based on a lot of high frequency data, has started deteriorating. We were very early to say that the India risk-off phase begins, though the market rally is till September. So, it is irrespective of the market. But from a macro perspective, it is deteriorating. Now, we are saying that there are early signs of reversal. We are not saying that we are in massive risk-on. After what happened in September 2023, we saw a big pullback rally playing out. So, that is not the case. Markets are not always absolute. It is always about relativity. Money always shifts on a relative basis. If you find it difficult to make money in the US, people will move out and this is the phenomenon. So, it is not like the same FIIs who were sellers for the last two years or many quarters, the same institutions are buying again. So, something has changed. Is India becoming very cheap? The answer is no. India is not that cheap. There has been marginal correction. But what has changed? The perception about the US has changed. And hence, they have to shift. They will shift where they see better safety. It is not about absolute return, it is about safety first. So, in this environment, safety is very much in India. Both from a currency perspective, macro perspective, and given the size of the Indian institutions or the corporates which we have and the entrepreneurship drive we have. So, we are in a very commanding situation. India was leading in every aspect. We peaked out first. We bottomed out first. And hence, in this rally, we will be the leader and that is the case right now. Why have markets retraced their post tariff selloff? Today major US markets like S&P, Nasdaq and Dow have pretty much retraced whatever they lost in April. If the problem is in the US, then why have US markets come back so smartly? Sandeep Tandon: Maybe the best gauge will be the VIX indicator. The volatility index spiked vertically and whenever VIX spikes sharply, it tends to cool off before you see the next level of up move again in the VIX and that is the reason for any extraordinary shorting or anything which is linked with the news flow. On April 7, the Trump tariff drama started, most of the noise or narrative and a small deviation from that are taken positively by people. But if you ask me, is everything sorted out? Is everything settled and the world is back to normal? The answer is no. So, you have seen extreme reactions on one side, then we are seeing a reverse of that. The market may correct again. You Might Also Like: Market cautious, not panicking; see opportunities in 4 sectors: Prashant Khemka I am looking at your holdings right now and one of the top holdings in your smallcap scheme is Reliance. In your largecaps, it is Reliance. In midcap it is Reliance. The number two holding in all your schemes is Jio be it smallcap midcap or largecap. Sandeep Tandon: It is very simple. When you get into a risk-off phase, when I say we were early and we underperformed also, it is not like we did not; we underperformed, it is a part of a larger strategy. You move from illiquid to liquid, you move from small and mid to large, and you move from high beta to low beta. Now, in a midcap or a smallcap, you have a compulsion to maintain a certain weight. Let us say we maintain 65% smallcap. Now, I am not negative on smallcaps from a longer-term perspective, but from a near-term perspective or near or medium-term perspective, we felt that they have potential to underperform and hence it makes sense to move to largecap and liquid names like some you highlighted… Smallcaps are still expensive? The risk-off liquidity is still there. Would you like to have exposure to largecaps? Sandeep Tandon: It is a balancing act where I am trying to balance my beta of the portfolio. I am trying to balance liquidity. I am also balancing my redemption. So far, nothing has come. But in every aspect, it has to be well. I always believe in our portfolio, I think liquidity is very important because we always say liquidity is the prana. If you do not have that liquidity in place, it becomes very difficult sometimes. It is a psychological discomfort, for whatever reason if you are unable to sell anything. We as a house give a lot of importance on liquidity analytics. When it comes to our own portfolio, we look into that aspect also. What is the one space that you are completely avoiding? Is this the market to go in for bottom-up neglected stories like paints because now you have got that crude reversal? Sandeep Tandon: Without getting into specific stock, we as a house always look for buying opportunities in any stock which gets into a hated or neglected zone. I am not ruling out Asian Paints also. But the entire thesis right now is which is the sector where we are slightly more negative. In fact, since we turned negative on the US market, particularly Nasdaq, we are grossly underweight technology. We have hardly any exposure in technology. So, it was an outright call on the US market. Like in September we turned bullish on China. So, what will you do? You go overweight on metals because there is no way directly I can play these markets. So, indirectly we try to protect our impact for whatever reason it happens. You Might Also Like: Should the market focus on tariff war and not India-Pakistan conflict? Samir Arora explains Currently our entire focus is on domestic stories right from January. It is domestic and within export-focused, we have only generic pharma stocks because we believe irrespective of noise and price movement, there is no choice for you, or even the US customers. We have 55-60% of the generic market share. Is there any substitute like Bangladesh or Vietnam or any other country? The answer is no. So, not much can happen there despite the fact that the discomfort is huge right now. But the one area where we are comfortable with good earnings. If you look at the earning cycle, we are very optimistic about pharma as a space, generic as a space and Indian companies are in the leadership position. So, anything which is in a leadership position, which is growing, we are overweight in that. You do not think there is a risk from tariffs because there has been so much back and forth on pharma? Sandeep Tandon: No, because there is no substitute. Let's say for a vehicle, you can defer your car purchase days for two years. You can defer buying your garments for six months, but you cannot defer your medicine even for two days. So that is a compulsion you have. So, when you have a compulsion, you do not have too many choices. So, it is all about getting into that part rather than saying Trump has a choice. Our generics are 78% to 98% cheaper as compared to other things, and that is why they are called generic. If they are so attractively low in the prices, how does it matter even if they put a 10-20% tariff? Our companies are in a position to pass that on immediately and that impact even for US customers will be very tiny and even distributors can absorb it. So, it is a larger thesis call without getting into Trump's narrative. Trump is a very smart businessman, he is doing everything right for his country from a longer-term perspective and people react as if he is stupid. No. He is very well calculated. Sometimes he acts stupid, but it is only acting. Look at how smartly he has implemented a 10% tariff and nobody has made noise. Everything is 10%. Auto is 25%, metal is 25%. So, anyway% global market has accepted 10%. We are actually funding them. There was a time when you were bullish on metals and precious metals as well. What is your take now on the metals? Sandeep Tandon: On precious metal, we are quite bearish right now. When I say bearish, it is only from a near-term perspective. We think that gold has peaked out near 3450, 3500, both from a near-term and medium-term perspective. But we are structurally bullish from a longer-term perspective. Somebody says that from a 5-year, 10-years perspective, one should have a very sizable bullion exposure in their portfolio. So, we are very constructive. The challenge is that immediately we cannot hedge much because none of the custodians are ready for hedging. So we have moved out of gold and shifted to silver. We have to maintain 10% exposure in multi-assets. So, we are running with minimum 10% right now and instead of gold, we are running with silver. We think silver has better potential and that is the way we are managing it in a very dynamic manner. You got approval for a new scheme in which you can go short on? Sandeep Tandon: Yes, it is not a scheme. It is a separate license known as the SIF, specialized investment funds. What is that? Sandeep Tandon: SEBI has recently come out of the circular on SIF. Basically, as a mutual fund, we get a new category where I can have long-short strategies. In mutual funds, we can only hedge and we can only do true hedging. The same stock I have to short or maybe hedge through options route or futures root but only in the indices. In this case, Sebi has allowed us to have a short position of 25%. The starting point is 25%. You can go short. Sandeep Tandon: Yes. Where will you go short? Sandeep Tandon: We are running a long-short strategy. Let us say we are running a long-short strategy on equity products and for whatever reason, let us say we do not like , let us say Infosys we are long and short TCS we can do that, which is not the case in current mutual funds. So, from a risk perspective, it is a great product. Though generally perceived as a high risk thing, it is a specialised product, meant for institutional investors who are more financially literate about this product. It reduces the risk because in the bull market, this strategy will underperform, but in a normal environment, it is a great risk mitigation tool. If you raise money tomorrow, how will you construct that fund and where will you go long and where short? Sandeep Tandon: Let the final approval come for the specific schemes. In Friday's context, I would like to maintain long exposure toward the domestic side and some of the sectors like auto to run some short position in auto as a sector. You can also run some short positions in IT though it is too late right now, it has already corrected a lot, but for example's sake, if in January we had an aggressive view towards IT, maybe we could have run 25% short position IT. It is not only a great hedging strategy, it also reduces risk volatility in my portfolio. So, it is a great product from a longer-term perspective. Where is it right now at these levels given that a large part of the correction is already behind us? Where do you have that kind of conviction to go acutely short? Sandeep Tandon: Since we are already in a mild risk-on or risk-on phase in India, I am not looking for shorting anything right now, even IT. I am not going to advise anybody to go short, rather we will look for a buying opportunity at an appropriate time. Has the appropriate time come? The answer is no, but it will emerge soon. We are waiting for the opportunity that as and when inflection points happen, we should be buyers in these names. So, like Reliance where else do you have that kind of conviction that you can buy all out right now. Sandeep Tandon: Infra, the large infra space irrespective of any government in India, irrespective of any global environment. We are investing as a country in the infrastructure space and that is a need of the hour and we do not have too many companies, like L&T. There is a scarcity. In the last many years, only limited options are left. So, anything related to port, airport, infra names, EPC companies are areas we are quite bullish on. We have a very skewed structure including power. So, if somebody says where is the long-term perspective in the next seven-eight years – a decadal opportunity, I would say power, be it thermal, or green or any other alternatives. So, you are still bullish on the Adani Group ? Sandeep Tandon: I am quite bullish on Adani Group because they are in that India centric space and irrespective of perception. We do a lot of perception analytics and we were early in spotting that group. We believe from a cash flow perspective, they are generating capex in the right direction. They will be a sizable and affordable player in this country for someone with a vision for the next five years.
Economic Times
12-05-2025
- Business
- Economic Times
What does Sandeep Tandon predict for India's bull market amid global economic changes?
Quant Mutual Fund's CIO, Sandeep Tandon, believes the Indian market remains in a bull run, albeit a challenging phase. While the US is in a risk-off phase, India shows early signs of risk-on reversal, driven by relative safety in currency, macroeconomics, and corporate strength. India's leadership in peaking and bottoming out positions it as a leader in the current rally. The focus is on domestic stories and generic pharma. Unexpected things are happening everywhere. Tariffs are getting solved. The geopolitical tensions make it look like we are at the end of this cycle; earnings season is ending. FII selling is ending. Lots of cycles are ending. I hope the bull market cycle is not ending. Sandeep Tandon: No, we are still in a bull run. However, the easy phase of bull run is over. We are in a decisive phase of the bull run. We are in a decisive bull run, but within that, we are in a difficult phase of the bull run. Now, let us look at India. India right now is in a risk-on phase. where the US is in a risk-off phase. Right from January, the US came into a risk-off phase. We are in a very unique situation where money will flow to India. In the last 15 trading or 20 trading sessions, the FII flow has been constructive. The moment the US investors become slightly jittery about the US, money will move out and this was our thesis in 2025, that the decoupling process will start, maybe by July. I was linking with the dollar cycle peaking out and the decoupling starting, but that process has already begun. What it means is that people are looking for safety. Even European investors are pulling out from the US. In the US, we have seen extraordinary cross border flows in the last many years. I think that cycle has peaked out. If 10% money shifts from the US to Asia-centred emerging markets, there will be a tsunami out here . The last fact sheet we wrote is not that bad for emerging markets. It is good for India. In fact, look at the beginning of the year, best of the strategists were bullish on the US. They wrote off emerging markets completely. Now the reverse has started. The US has peaked out. We said in January that the US will correct 15% to 20%, particularly since Nasdaq has already corrected. Maybe we can see a small pullback rally, but the ugly face of the next level of fall is still pending in the US. Why do you call India a risk on? Is it purely because of the valuations or are there other macro parameters which make you feel so? Sandeep Tandon: Yes, it is a macro parameter. Last year, in July 2024, we were very early to say it is a risk-off phase for India because macro, based on a lot of high frequency data, has started deteriorating. We were very early to say that the India risk-off phase begins, though the market rally is till September. So, it is irrespective of the market. But from a macro perspective, it is deteriorating. Now, we are saying that there are early signs of reversal. We are not saying that we are in massive risk-on. After what happened in September 2023, we saw a big pullback rally playing out. So, that is not the case. Markets are not always absolute. It is always about relativity. Money always shifts on a relative basis. If you find it difficult to make money in the US, people will move out and this is the phenomenon. So, it is not like the same FIIs who were sellers for the last two years or many quarters, the same institutions are buying again. So, something has changed. Is India becoming very cheap? The answer is no. India is not that cheap. There has been marginal correction. But what has changed? The perception about the US has changed. And hence, they have to will shift where they see better safety. It is not about absolute return, it is about safety first. So, in this environment, safety is very much in India. Both from a currency perspective, macro perspective, and given the size of the Indian institutions or the corporates which we have and the entrepreneurship drive we have. So, we are in a very commanding situation. India was leading in every aspect. We peaked out first. We bottomed out first. And hence, in this rally, we will be the leader and that is the case right now. Why have markets retraced their post tariff selloff? Today major US markets like S&P, Nasdaq and Dow have pretty much retraced whatever they lost in April. If the problem is in the US, then why have US markets come back so smartly? Sandeep Tandon: Maybe the best gauge will be the VIX indicator. The volatility index spiked vertically and whenever VIX spikes sharply, it tends to cool off before you see the next level of up move again in the VIX and that is the reason for any extraordinary shorting or anything which is linked with the news flow. On April 7, the Trump tariff drama started, most of the noise or narrative and a small deviation from that are taken positively by people. But if you ask me, is everything sorted out? Is everything settled and the world is back to normal? The answer is no. So, you have seen extreme reactions on one side, then we are seeing a reverse of that. The market may correct again. I am looking at your holdings right now and one of the top holdings in your smallcap scheme is Reliance. In your largecaps, it is Reliance. In midcap it is Reliance. The number two holding in all your schemes is Jio be it smallcap midcap or largecap. Sandeep Tandon: It is very simple. When you get into a risk-off phase, when I say we were early and we underperformed also, it is not like we did not; we underperformed, it is a part of a larger strategy. You move from illiquid to liquid, you move from small and mid to large, and you move from high beta to low beta. Now, in a midcap or a smallcap, you have a compulsion to maintain a certain weight. Let us say we maintain 65% smallcap. Now, I am not negative on smallcaps from a longer-term perspective, but from a near-term perspective or near or medium-term perspective, we felt that they have potential to underperform and hence it makes sense to move to largecap and liquid names like some you highlighted… Smallcaps are still expensive? The risk-off liquidity is still there. Would you like to have exposure to largecaps? Sandeep Tandon: It is a balancing act where I am trying to balance my beta of the portfolio. I am trying to balance liquidity. I am also balancing my redemption. So far, nothing has come. But in every aspect, it has to be well. I always believe in our portfolio, I think liquidity is very important because we always say liquidity is the prana. If you do not have that liquidity in place, it becomes very difficult sometimes. It is a psychological discomfort, for whatever reason if you are unable to sell anything. We as a house give a lot of importance on liquidity analytics. When it comes to our own portfolio, we look into that aspect also. What is the one space that you are completely avoiding? Is this the market to go in for bottom-up neglected stories like paints because now you have got that crude reversal? Sandeep Tandon: Without getting into specific stock, we as a house always look for buying opportunities in any stock which gets into a hated or neglected zone. I am not ruling out Asian Paints also. But the entire thesis right now is which is the sector where we are slightly more negative. In fact, since we turned negative on the US market, particularly Nasdaq, we are grossly underweight technology. We have hardly any exposure in technology. So, it was an outright call on the US market. Like in September we turned bullish on China. So, what will you do? You go overweight on metals because there is no way directly I can play these markets. So, indirectly we try to protect our impact for whatever reason it happens. Currently our entire focus is on domestic stories right from January. It is domestic and within export-focused, we have only generic pharma stocks because we believe irrespective of noise and price movement, there is no choice for you, or even the US customers. We have 55-60% of the generic market share. Is there any substitute like Bangladesh or Vietnam or any other country? The answer is no. So, not much can happen there despite the fact that the discomfort is huge right now. But the one area where we are comfortable with good earnings. If you look at the earning cycle, we are very optimistic about pharma as a space, generic as a space and Indian companies are in the leadership position. So, anything which is in a leadership position, which is growing, we are overweight in that. You do not think there is a risk from tariffs because there has been so much back and forth on pharma? Sandeep Tandon: No, because there is no substitute. Let's say for a vehicle, you can defer your car purchase days for two years. You can defer buying your garments for six months, but you cannot defer your medicine even for two days. So that is a compulsion you have. So, when you have a compulsion, you do not have too many choices. So, it is all about getting into that part rather than saying Trump has a choice. Our generics are 78% to 98% cheaper as compared to other things, and that is why they are called generic. If they are so attractively low in the prices, how does it matter even if they put a 10-20% tariff? Our companies are in a position to pass that on immediately and that impact even for US customers will be very tiny and even distributors can absorb it. So, it is a larger thesis call without getting into Trump's narrative. Trump is a very smart businessman, he is doing everything right for his country from a longer-term perspective and people react as if he is stupid. No. He is very well calculated. Sometimes he acts stupid, but it is only acting. Look at how smartly he has implemented a 10% tariff and nobody has made noise. Everything is 10%. Auto is 25%, metal is 25%. So, anyway% global market has accepted 10%. We are actually funding them. There was a time when you were bullish on metals and precious metals as well. What is your take now on the metals? Sandeep Tandon: On precious metal, we are quite bearish right now. When I say bearish, it is only from a near-term perspective. We think that gold has peaked out near 3450, 3500, both from a near-term and medium-term perspective. But we are structurally bullish from a longer-term perspective. Somebody says that from a 5-year, 10-years perspective, one should have a very sizable bullion exposure in their portfolio. So, we are very constructive. The challenge is that immediately we cannot hedge much because none of the custodians are ready for hedging. So we have moved out of gold and shifted to silver. We have to maintain 10% exposure in multi-assets. So, we are running with minimum 10% right now and instead of gold, we are running with silver. We think silver has better potential and that is the way we are managing it in a very dynamic manner. You got approval for a new scheme in which you can go short on? Sandeep Tandon: Yes, it is not a scheme. It is a separate license known as the SIF, specialized investment funds. What is that? Sandeep Tandon: SEBI has recently come out of the circular on SIF. Basically, as a mutual fund, we get a new category where I can have long-short strategies. In mutual funds, we can only hedge and we can only do true hedging. The same stock I have to short or maybe hedge through options route or futures root but only in the indices. In this case, Sebi has allowed us to have a short position of 25%. The starting point is 25%. You can go short. Sandeep Tandon: Yes. Where will you go short? Sandeep Tandon: We are running a long-short strategy. Let us say we are running a long-short strategy on equity products and for whatever reason, let us say we do not like , let us say Infosys we are long and short TCS we can do that, which is not the case in current mutual funds. So, from a risk perspective, it is a great product. Though generally perceived as a high risk thing, it is a specialised product, meant for institutional investors who are more financially literate about this product. It reduces the risk because in the bull market, this strategy will underperform, but in a normal environment, it is a great risk mitigation tool. If you raise money tomorrow, how will you construct that fund and where will you go long and where short? Sandeep Tandon: Let the final approval come for the specific schemes. In Friday's context, I would like to maintain long exposure toward the domestic side and some of the sectors like auto to run some short position in auto as a sector. You can also run some short positions in IT though it is too late right now, it has already corrected a lot, but for example's sake, if in January we had an aggressive view towards IT, maybe we could have run 25% short position IT. It is not only a great hedging strategy, it also reduces risk volatility in my portfolio. So, it is a great product from a longer-term perspective. Where is it right now at these levels given that a large part of the correction is already behind us? Where do you have that kind of conviction to go acutely short? Sandeep Tandon: Since we are already in a mild risk-on or risk-on phase in India, I am not looking for shorting anything right now, even IT. I am not going to advise anybody to go short, rather we will look for a buying opportunity at an appropriate time. Has the appropriate time come? The answer is no, but it will emerge soon. We are waiting for the opportunity that as and when inflection points happen, we should be buyers in these names. So, like Reliance where else do you have that kind of conviction that you can buy all out right now. Sandeep Tandon: Infra, the large infra space irrespective of any government in India, irrespective of any global environment. We are investing as a country in the infrastructure space and that is a need of the hour and we do not have too many companies, like L&T. There is a scarcity. In the last many years, only limited options are left. So, anything related to port, airport, infra names, EPC companies are areas we are quite bullish on. We have a very skewed structure including power. So, if somebody says where is the long-term perspective in the next seven-eight years – a decadal opportunity, I would say power, be it thermal, or green or any other alternatives. So, you are still bullish on the Adani Group? Sandeep Tandon: I am quite bullish on Adani Group because they are in that India centric space and irrespective of perception. We do a lot of perception analytics and we were early in spotting that group. We believe from a cash flow perspective, they are generating capex in the right direction. They will be a sizable and affordable player in this country for someone with a vision for the next five years.
Mint
05-05-2025
- Business
- Mint
Worried about volatility? Here's where to put your money in these uncertain times.
It's no exaggeration to say we are in turbulent times. The war in Ukraine continues unabated, the Israel-Gaza conflict is festering, Iran and its proxies are active in the Middle East, as is the US, Bangladesh has descended into chaos, and now Pakistan has provoked India. Donald Trump has also been stirring the pot with his tariffs and other pronouncements. Global markets have been in a tizzy ever since he assumed office. No one is sure where this trade war is going, which countries may benefit or lose, or whether the global economy will grow or enter a recession. These uncertainties are showing up in stock markets and other places. Gold has been going through the roof. Bond yields are still high, even though the Federal Reserve cut rates by 50 basis points in September 2024. The question on investors' lips is whether there is a type of portfolio than can help tide over these uncertain times. It is my endeavour to simplify this. My suggestion? Invest in just two mutual funds! Also read | Schengen, US visas: How to crack the application process, plan a smooth holiday Equity markets are volatile at the best of times. In these uncertain times, choppiness increases. While allocation to equities cannot be avoided, we can choose to diversify across asset classes. Also, it helps if asset levels can be adjusted appropriately, based on the gyrations of markets. A dynamic asset allocation fund, such as a balanced advantage fund, is thus good choice. In this type of fund, the equity-debt allocation is based on what's happening in stock markets. There are metrics to determine this, such as the price to earnings or price to book of the portfolio, which can then be rebalanced. The portfolio will also have options holdings to ensure equity taxation after a year of holding. The second suggestion is a multi-asset fund, which has equity, debt, commodities, real estate, and so on. This provides diversification, and the portfolio is realigned at predetermined intervals, based on certain formulas or algorithms. These two funds alone are good enough to help you weather the storm. Also read: Not many claim mental healthcare insurance. Here's why However, some investors may want a bit more nuance in their portfolios, with the ability to have specific exposure and control over the underlying assets. For those who want broad-based exposure to equity in their portfolio, an all-market index fund, based on Nifty 500, is a good choice. This encompasses a market capitalisation of over 92%. Gold is also gaining salience in light of geopolitical uncertainties, war and conflict in various regions, and the changing global order and financial system. Because of all these factors, gold buying by central banks has shot up tremendously over the past few years. Silver is another precious metal of note. Buying a gold and silver fund at this time would provide additional diversification and a hedge against volatile equities. Also read: After large-cap switch, Quant MF's Sandeep Tandon starts to add small-caps A debt fund may not be a favoured investment option these days, especially after the tax advantage it enjoyed was removed. However, debt funds still have plenty of positives. They are well-diversified, unlike fixed deposits and bonds, which have exposure to a single entity. They are also professionally managed, tax-efficient, and offer unparalleled liquidity and flexibility. The suggested subcategories here are corporate bond funds, banking and PSU debt funds and/or dynamic bond funds. Being invested in the right kind of fund is very important in turbulent times. These funds may be just what you need to navigate the ongoing uncertainty and emerge unscathed. The author is managing director & principal officer at Ladder7 Wealth Planners and the author of the book If God Was Your Financial Planner .
Mint
05-05-2025
- Business
- Mint
After large-cap switch last year, Quant MF's Sandeep Tandon starts to add small-caps
MUMBAI : Sandeep Tandon, 55, founder and chief investment officer of Quant Mutual Fund, has started seeing opportunities in small caps even as he stays cautious about mid-caps, about 10 months after his asset management company moved towards large-caps amid 'risk-off' conditions. 'We are seeing a minor risk-on environment now," said Tandon, whose firm manages close to ₹ 90,000 crore in investor assets. Quant Small Cap Fund is the largest scheme for the fund house with assets of around ₹ 26,000 crore. His own equity portfolio has 60% exposure to large-caps, 15% to mid-caps and 25% to small-caps, Tandon said in an interaction with Mint on 'Guru Portfolio', a series whereleaders from the financial services industry share how they manage their money. Tandon, who is bullish on small-caps for the long term, has allocated more towards large-caps over the past year. He moved out of mid- and small-caps around July last year as Quant's data-driven investment model signalled a risk-off period. His allocation last year was as follows: 27% to small-caps, 23% to mid-caps and 50% to large-caps. However, over the past three months, Tandon has been seeing 'a minor risk-on environment" and more opportunities in the small-cap segment as stock prices have corrected sharply, but he still remains more cautious on mid-caps. All of Tandon's personal investments are managed through Quant Mutual Fund's schemes, and portfolio changes influence his own allocation. About 75% of his portfolio is allocated to equities, 15% is in real estate and the remaining 10% is in liquid funds for any contingencies. He doesn't see real estate holdings as an investment as these properties are family-owned for residential and office use. While Tandon's equity allocation was 60% last year, but his incremental stock investments went up from 50% to 75% over the past five years amid the stock market rally. While his portfolio has delivered negative returns of 2-3% over the past year, the five-year average annualized returns stand at 35%. Unlike the traditional buy-and-hold style, Tandon says his funds follow 'short-, medium-, long- and even investments with decadal view". He cites the example of Japan. After 1989, the Japanese markets didn't touch new highs till 2024. 'So, for the better part of three decades, if the investor had just stayed long-term, he or she would have got index-like returns," Tandon said. 'Investors always chase alpha (outperformance vs alpha) regardless of the market cycle, which is possible if certain investments are looking to capture short-term opportunities." Quant's data analytics model has been built over the years and follows the valuation, liquidity, risk appetite and timing analytics or the VLRT framework. For example, when both risk appetite and liquidity are at elevated levels in the markets, the investments can be more aggressive. Tandon's interest in quantifying market dynamics stems from his early experience in the badla market, which for several years was India's indigenous derivatives market before the futures & options (F&O) segment was introduced in early 2000s. 'It was possible to reverse calculate the badla rate to decode the mood of the market. That's the reason I always talk about market-implied analytics," Tandon said. 'The genesis of market-implied analytics actually comes from the badla market." Tandon prefers equities over real estate. 'There used to be that mindset that, as soon as you get your first savings, you should start building a house. In those early days, I took a loan to purchase my first house. Then, as a family, we bought a couple of more houses," he said. 'However, if I had used those funds to invest in equities, the wealth creation would have been much larger." Tandon doesn't keep a contingency fund separately as he maintains 10% of his allocation in liquid funds. He doesn't believe that one needs to be 100% invested in markets all the time. 'In any case, I have a very large holding in equities. The liquid fund allocation gives me a psychological comfort," Tandon said. On life insurance and health cover, he says he has been adequately covered by his company. Tandon doesn't plan to retire anytime soon. 'I don't like to think of retirement as it has negative connotations for me," he said. 'I believe in working till the last day of life. When you think like that, your involvement will be on the higher side, your reflexes will be on the higher side. The mental agility remains intact." He has not planned any separate retirement corpus. All his investments can be easily liquidated as and when he requires them. Markets are about cycles, according to Tandon. 'Nobody can identify the exact trough or crest of the market. Something has changed for India. Our perception analytics says that India's perception has changed, which means any valuation multiple can remain elevated for a longer period of time," he said. 'Recently, too, we saw this play out. Since 2022-2023, people have been saying markets are expensive, but markets have still rallied from those levels till as late as September 2024." 'We have to live with the reality that India is buy-on-dip. Structurally, something has changed. So, India's long-term growth story remains intact, despite the tariff noise that is playing out. In absolute and relative terms, India can be a big beneficiary. India is the only country in Asia that can come close to offering the scale of China, if the US wants to reduce its reliance on China," he said. His passion for analytics drives him, keeping his energy levels high, said Tandon. 'If you like something, you always find the energy to pursue it." Apart from that, he likes to read. He also listens to podcasts if he finds time or whenever he takes his walks. 'I also like to listen to music to unwind."
