BQ Edge | Pockets Where Sandeep Tandon And Rajeev Thakkar See Investment Opportunities

Sandeep Tandon expects emerging markets to outperform, while Rajeev Thakkar is on the lookout for mispriced opportunities.

A pedestrian wearing a protective face mask passes in front of the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Michael Nagle/Bloomberg)
A pedestrian wearing a protective face mask passes in front of the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

Global markets are entering a decade of wealth destruction marked by volatility, heightening geo-political tensions, and changes on the climate front, according to Sandeep Tandon, chief executive officer of Quant Mutual Fund.

“Our analysis shows that the U.S. market has either already peaked out or is on the verge of peaking out. Global risk appetite is also changing,” Tandon told BloombergQuint’s Niraj Shah during a BQEdge show, adding that he expects money to flow from developed markets to emerging markets. “A lot many things are in favour of emerging markets from the next three-year perspective,” he said.

Emerging markets have the potential to outperform the developed markets. The impact of this shift will be felt in another six to eighteen months.
Sandeep Tandon, CEO, Quant Mutual Fund
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Tandon warned that the high liquidity in global markets post the Covid-19 disruption, geo-political instability and changing climate will affect crop cycles and commodities leading to a decade of high inflation. Prices may start rising as soon as 2021, he said.

In such an environment, he suggests investors should look at stocks and sectors that have been neglected thus far. “All sectors and stocks in most admired category will underperform. And all the stocks in the neglected territory will outperform.”

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Mispriced Opportunities 

Rajeev Thakkar, chief investment officer and director at PPFAS Mutual Fund, has a relatively different approach but agrees that there are pockets of opportunities amid the uncertainty.

“There is no reason you should take my forecast for the next six months seriously because I didn’t see the last six months coming,” he said. Instead the mutual fund house looks for companies that will perform in any given situation. In the absence of such opportunities, it prefers to hold cash. Currently the firm is fully invested in its multi cap funds—which include stocks from both India and abroad—and is 90% invested in its tax-saving fund.

There are one-off mispriced opportunities which we try and identify and participate in those. The thing is that new ideas don’t come everyday.
Rajeev Thakkar, CIO, PPFAS Mutual Fund

One of his preferred areas of investment is the renewable energy and electric vehicle space. Over the last few years, the cost of renewable energy has dropped below that of thermal power, Thakkar said. “So far renewable energy has been all about environment. Now it's about economics and that really tips the scale.” This is likely to impact most industries – from those that use oil, make oil, use money made by the oil industry, etc., he said.

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