Know Your Fund Manager | Paresh Jain, Fund Manager, Baroda BNP Paribas Mutual Fund

A Baroda BNP Paribas Mutual Fund manager shares his journey across the sell side and buy side, investment philosophy based on growth at a reasonable price, and focus on business quality, management integrity and valuations.

Baroda BNP Paribas Mutual Fund's fund manager discusses his investment journey, GARP philosophy and focus on business quality, management integrity, valuations and long-term wealth creation.

Let's start with your personal story

I was born in Delhi and spent the first 26 years of my life in the Capital city. My parents belong to the city of Nawabs, i.e Lucknow. My father, a mechanical engineer from IIT Kanpur and my mother, a homemaker by profession, imbibed values like discipline, humility and perseverance, which guide me in my approach to fund management. A degree in MBA finance provides a strong foundation and brings greater structure and discipline to the investment process.

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How did you land this job?

With a successful family business, it was natural that I would pursue the same. My journey into fund management was a convergence of destiny and my aspirations. After my MBA in finance, I went on to work with Evalueserve for 3.5 years before moving to the vibrant city of Mumbai. I started on the sell side and eventually, after ~3.5 years, moved to the buy side (initially as an analyst and then in fund management). After working for nearly 15 years with organisations like Max Life, Bajaj Life and managing funds like small cap, flexi cap, and asset allocation, I am now working with Baroda BNP Paribas Mutual Fund as a fund manager.

Which funds are you currently managing?

I am currently managing four strategies, viz. small cap, multi cap, conservative hybrid and consumption fund. Total AUM is around Rs 7,500 crore.

What is your investment philosophy and how will you describe your investment strategy?

BMV (Business - Management - Valuation))

I believe that when one is investing in India, growth takes precedence over other parameters. Our philosophy of investing is GARP (Growth at a Reasonable Price), and we focus on the following.

* Business - The core philosophy is to identify and invest in businesses that have a strong business moat and catalysts that lead to potentially superior growth. While macroeconomic factors like interest rates, FII flows, crude, etc. will impact the entire economy, companies with pricing power, internal efficiencies or regulatory tailwinds will outperform the broader market and deliver superior returns over the medium term.* Management - While it is subjective and very difficult to quantify, any business needs to generate long-term value creation. Excellent leadership is proven over time through a long- term track record of delivery vs guidance, capital allocation, operational excellence and fair treatment of minority shareholders. Conducting a 360-degree audit across buyers, suppliers, lenders and rating agencies presents reasonable insights into the operational integrity of the management.

* Valuation - India being a growth market, the trade-off between growth and valuation is always a dilemma. Hence, the focus is on growth at a reasonable valuation (GARP). A particular investment needs to have growth ahead of its peers for similar valuations, or for a comparable growth profile, valuation should be at a discount to its peers. Based on experience, we also place a lot of importance on cash generation, focusing a lot more on operating cash flows.What excites you most about managing other people's money?

Managing other people's money is more difficult than managing your own money. Hence, we need to ensure that excitement levels are contained, as that can lead to irrational decision-making. Identifying businesses and seeing them grow manifold through the years ultimately leads to value creation for the investors. Therefore, the focus is on in-depth research and hard work. As a successful fund manager, returns are very important. But need to ensure that integrity is not compromised and investors' trust is earned via consistent and disciplined approach.