How this veteran fund manager is adapting to new market realities

After three decades of beating the indices, Prashant Jain shifts his strategy to brace for more tempered returns

- Sashind Ningthoukhongjam

Before joining the mutual fund industry in 1991, Prashant Jain took a civil service exam. He answered one question. However, after reading the question in Hindi, he rewrote the answer. As it turned out, the first version was correct, and he lost 60 marks.

When he became an investment manager, he adopted an absolutely opposite approach. He no longer believed in the eraser. He built a reputation for his ability to stick to his convictions, even if it meant lagging the markets for a while. Jain's track record in HDFC Asset Management Co. Ltd as one of the longest-serving fund managers was mixed. He managed the HDFC Balanced Advantage Fund from February 1994 to July 2022. Though he beat the indices, the last leg of his tenure was rough. After recording handsome returns for initial 20 years, his performance moderated by his outsized bet on public sector undertakings (PSUs).

However, even those bets eventually paid off during the last 18 months of his stint at HDFC AMC. Subsequently, he launched his venture 3P Investment Managers Pvt. Ltd in May 2023, which currently manages over ₹15,000 crore in assets in two funds. Since inception, it has delivered pre-tax return of 35% compound annual growth rate (CAGR), while the Nifty 50 and Nifty 200 indices delivered 18.3% and 24.2%, respectively.

Here are excerpts from his December quarter letter to investors of 3P Investment Managers.

Setting expectations right

Jain has sobering news for those expecting similar returns from stocks as seen during the last five years. For context, the Nifty 50 has recorded a CAGR of 16% since December 2019. Since March 2020, when the market fell sharply due to the covid-19 outbreak, the return has been a whopping 28% CAGR.