'If I Had A Boss, I Would Have Lost My Job Too': Marcellus' Saurabh Mukherjea

Saurabh Mukherjea, founder and chief investment officer (CIO) of Marcellus Investment Managers, said most quality fund managers lost their jobs during the four years in which the style stayed out of favour, and that he might have met the same fate had he reported to a boss.

"Quality fund managers, most of them ended up losing their jobs. Perhaps if I had a boss, I would have also lost my job," Mukherjea told NDTV Profit.

He pointed to the Nifty200 Quality 30 index, run by the National Stock Exchange (NSE), as a simple proxy for the style. The index underperformed the Nifty for four consecutive years from 2022 to 2025, the first time in its history, he said.

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Mukherjea said investment styles move in cycles and cited value investing as the precedent. Value was the market favourite until 2010-11, then went through what he called a horrific decade ending 2020, when many of its followers were trolled. Several of those investors have come back strongly in the last five to six years, he said.

"Value went out of style, value came back in the post-COVID period," Mukherjea said. Quality, he added, usually returns when the economy hits a rough patch, which is broadly where India is now. "As quality comes back, those numbers will reverse," he said.

Asked why the public should trust managers whose portfolio management services (PMS) funds have drawn criticism on social media for trailing peers, Mukherjea said the Indian mutual fund industry has seen such phases before. Successful fund managers have enjoyed 10 to 15 years of strong performance followed by a decade of poor returns, he said, and many of them have since returned.

On the trolling itself, he was blunt. "If I spend my time thinking about the public commentary, then neither my colleagues nor I will get any work done," he said.

Owning Up To Past Mistakes

Marcellus made mistakes irrespective of which style was in favour, and has rectified them, Mukherjea said.

"We made mistakes, regardless of which style is in favour or out of favour. We rectified those mistakes," he said.

He expects the firm to gain twice: from the reversal in style and from the work the team put in through the difficult years. "Not only will we benefit from the style reversion, but I think we will also benefit from the hard yards put in through the difficulties that we went through," he said.

He outlined three changes he said have helped PMS performance recover strongly over the last nine to ten months.

The first was to stay concentrated while adding diversification. In its first five years, he said, performance was "blistering" but the portfolios leaned heavily on consumer and financial stocks. Marcellus now looks for well-run franchises across auto ancillaries, autos, pharma, healthcare and internet companies, and its PMS portfolios are far more diversified than they were four years ago.

The second was a rule on taking profits. If a share price compounds much faster than profits over two to three years, Marcellus trims the position. Mukherjea gave an example: a stock whose price compounds at 27% over five years while profits grow 18% sees its price-to-earnings (PE) multiple rise, which calls for remedial action. The firm does not exit the company entirely, he said, but cuts the position size and redeploys the money into another high-quality franchise. He said the discipline has been institutionalised over the last two to three years and is helping the firm this year.

The third was a changed India. A wave of initial public offerings (IPOs) over the last five to six years has brought more high-quality compounders to the market, Mukherjea said. As the government pulls back from public services, private companies are stepping in, in hospitals, healthcare, diagnostics and medical insurance. That opens space for private operators to compound consistently, he said, and was not the case when he wrote The Unusual Billionaires and his coffee can investing work a decade ago. Marcellus has loaded up on these newer compounders.

Pramod Gubbi, managing director and chief executive of Marcellus Mutual Fund, said the past carries both good and bad baggage, and the aim is to learn from it. The recovery in PMS performance, he said, is early evidence that the lessons have been applied, and the firm is on a better footing as it starts its mutual fund journey.

Gubbi added that mistakes will happen again. "It is the nature of the beast," he said, and every market participant needs to turn those lessons into continuous improvement.

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