Those performing well are retained: Sunil Subramaniam

Excerpts of an interview with Sunil Subramaniam, MD & CEO, Sundaram AMC:

 

How will the investment philosophy expected to change with new team on board?

In terms of the allocation of teams, those who have been performing well in their respective categories have been retained. So, we don’t expect much of a change in philosophy and style to happen. Ravi’s (Ravi Gopalakrishnan, now CIO of Sundaram AMC), philosophy of bottom up stock picking is not very different from that of Sundaram’s and he has done a better job of stock picking over the last two years. Fundamentally, both Principal and Sundaram have been process-oriented, and follow a bottom up approach, and have largely a growth-bias in the portfolio. With Ravi coming in, we expect the quality of overall equity portfolio to be enhanced.

What will be the expense ratio for new schemes?

Because of the merger, the funds grow larger in size. Sebi has a reverse capturing method of TER (total expense ratio) computation and the cost of the funds is expected to come down dramatically. In our estimate, there will be about 36 crore of TER savings that will accrue to investors due to the merger.

How is the transition likely to progress?

A lot of homework has already been done. Now we are in the process of implementation. Because of the merger, the overall portfolio would have expanded by about 15% to 20%. One of our initial efforts will be to concentrate the portfolios back to the usual 40 to 50 stock as opposed to 60 to 70. We will spend the next month or so realigning the portfolios gradually, because we don’t want to harm the investors by churning it a lot immediately. But we will do that gradually over a period of a month.

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