Mr. Harshad Borawake
Head of Research & Fund Manager - Equity, Mirae Asset Mutual Fund
Mr. Harshad Borawake joined Mirae Asset Mutual Fund in December 2016 as the Head of Research. Along with strengthening the overall research and investment processes, his core coverage sectors include Financials, Oil & Gas and Economy.
He has an overall professional experience of more than 19 years across industries like Financials, Oil & Gas, Logistics and Aviation. Prior to joining Mirae Asset, he was with Motilal Oswal Securities as Vice President (Research) and Capmetrics & Risk Solutions as Research Analyst - Equity. Mr. Borawake is a Bachelor in Engineering and has done MBA in Finance.
Mr. Borawake manages Mirae Asset Aggressive Hybrid Fund, Mirae Asset Balanced Advantage Fund, Mirae Asset Equity Savings Fund & Mirae Asset Multi Asset Allocation Fund.
Q1. The current geopolitical and trade developments-including the recent 50% tariff by the U.S. on Indian imports, and talk of broader tariffs on sectors like pharma-have added a layer of uncertainty. How should Indian investors interpret these global headwinds while continuing their long-term equity investment plans?
Ans: The tariff issue is very fluid and given that negotiations are underway, we have not seen the end of it. Nevertheless, India’s exposure in terms of goods exports to US is ~2% and hence not that meaningful. Indian economy is largely inward looking economy and investors should focus more on the corporate earnings growth. After dismal sub 2% growth for Nifty 50 in Fy25, earnings revival is expected in FY26 led by tax incentives, RBI infused liquidity, good monsoon, festive season and base effect. Given the valuations, investors should temper down the return expectation in the near term, while continue to remain invested from medium to long term perspective and growth levers for Indian earnings continue to remain strong.
Q2. On the domestic front, we’ve seen persistent FII outflows despite relatively strong macro fundamentals. What are the key factors driving this trend, and should retail investors be concerned-or see this as a contrarian signal?
Ans: FII inflow and outflows are driven by multiple factors including relative valuations of India and other competing economies. With the strong domestic flows now led by SIPs the impact of FII flows now impacts relatively less than few years back. Investors should focus more on corporate earnings growth and valuations than these factors.
Q3. With market valuations varying across segments, where do you see better risk-adjusted opportunities for SIP investors today-large caps, midcaps, or small caps?
Ans: It is better to take a basket approach with large part 60-65% towards large cap and the rest in mid and small cap.
Q4. For investors considering momentum or factor-based strategies, what performance metrics beyond historical returns should they closely monitor?
Ans: Any Factor investing will expose you to the risk of cyclicity. Rather than relying solely on single factors, we recommend combining momentum or any other factor with contrasting factor as part of your portfolio. While evaluating any factor, key is to understand the methodology of the factor investment, looking not only return and risk but also focusing on rolling return specially percentage of periods the strategy outperforms its benchmark, showing persistence. Downside deviation and Sortino Ratio and Information Ratio will also be key along with Upside and downside capture ratio. Evaluate factor investing from long-term investment horizon and framework i.e. at least 5 Yr + is critical. Lastly, suitability of each factor investment based on risk and return framework of individual client is essentially. For example, for you can give momentum from large mid universe and give momentum from Mid Small universe as well.
Q5. A widely cited and persistent concern among investors is the challenge active funds face in consistently outperforming their benchmarks, especially after fees. How do you address this common perception, and what specific characteristics of your investment philosophy or process do you believe give your fund a sustainable edge to generate alpha over the long term?
Ans: Perform in the near term can be volatile, but over the long term, history suggests that the median performance of the active funds is relatively better than the benchmark performance. The basic tenets for a sound portfolio include bottom up stock piking based on fundamentals, management quality and valuations along with barbell approach wherein we have combination of growth as well as value names. Out philosophy is centered around buying good quality business upto a reasonable valuation, backed by strong management and holding them for the long term. Also, while all the stocks come from a bottom up stock picking process, we also keep cognizance of the benchmark while building the portfolios.
Q6. Could you please provide your analysis of the Q1 earnings season and outline your expectations for Q2, specifically highlighting how you are factoring in the current global macroeconomic tailwinds?
Ans: This earnings season has been marginally better than expected on the headline numbers are concerned with numbers coming marginally ahead of estimates. (on back of Construction materials, financials, metals & minings, Autos). As said earlier, we expect consumption piece in the economy to review in the 2H and from the Q2 results perspective, we would more watch out for management commentary than the actual results to get sense on the overall earning revival trajectory.
Note: Views provided above are based on information in the public domain and subject to change. Investors are requested to consult their mutual fund distributor for any investment decisions.
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Please note we have published the answers as it is received from the Fund Manager of Mirae Asset.
