Subramaniam, who was speaking at the virtually-held fourth edition of ETMarkets Global Summit, believes that India is in a “delicious position”, supported by low interest rates and low inflation. “Government is probably in a position in this Budget to kickstart the investment cycle not only through themselves but through policy reforms,” he said.
Known for his successful track record in midcap and smallcap investing, Subramaniam also said that it is pertinent to remember that in the current business cycle, midcaps and smallcaps are still underperforming the largecaps and are available at a discount.
“I think the midcap space is going to be the most exciting space because the winners of the past are not guaranteed to be the winners of the futures,” Subramaniam said.
The veteran fund manager advised investors to enter midcaps with a five-year horizon, which can help investors minimise risks attached with investing in the broad market.
The Nifty Midcap and Nifty Smallcap indices had risen 85 per cent and 104 per cent, respectively, in the first nine months of the current financial year.
However, Subramaniam urged investors to diversify their bets when they look at investing in the broad market by accumulating a basket of thematic, sectoral and passive strategy funds that allow investors to minimise the risk of underperformance by a fund manager.
Subramaniam said that in his personal capacity, he has invested 60 per cent in midcaps, 25 per cent in smallcaps and 15 per cent in largecaps, which are stocks that have become largecaps from midcaps when he bought them.
The straight-shooting fund manager also debunked the idea that value investing is set to make a comeback, as he believes that in a growth market such as India, the value investing style has no place. “Growth-based investment philosophy will outperform in India as long as it remains a growth economy,” he said.