e-fundresearch: Which benchmark do you adhere to?
Krishnan: MSCI India.
e-fundresearch: Are you also responsible for other funds at the moment?
Krishnan: Carlson Fund – Asian Small Cap (Co-fund manager).
e-fundresearch: What is the total volume that you manage in all your funds?
Krishnan: About USD 775 mn.
e-fundresearch: Regarding the performance: which performance did you achieve since the beginning of the year and in the years 2003-2009? Absolutely and relatively to the relevant benchmark?
e-fundresearch: How content are you with your own performance in the last years and this year?
Krishnan: In 2008, Carlson India outperformed the benchmark despite a bottom up investment process and despite holding a large number of small caps. Our process held up very well.
In 2009, the fund lagged the benchmark marginally though we were ranked in the top quartile. The performance in 2009 could have been better. There is always scope for improvement.
e-fundresearch: How are you able to deliver added value for your investors with your performance?
Krishnan: Long years of experience (20 years in India investing) puts me in a good position. Having a bottom up investment process which is robust and which has stood the test of time also lends solidity to the funds. Being close to the ground is an added advantage in India.
e-fundresearch: How long have you been a fund manager already?
Krishnan: I am a fund manager since 1990 and I have 20 years experience.
e-fundresearch: What were your biggest successes and your biggest disappointments in your career as fund manager?
• To have managed the first private sector mutual fund in India in 1993-94 and to get it to be the best close-ended fund in 1994 in India
• To have played an important role in growing Carlson Asian Small Cap Fund from under USD 10 mn in 1999 to over USD 1.2 bn in 2007 (at peak)
• To have seen the funds I was involved with fall as much as they did in 2008
e-fundresearch: What kind of capital market situation do we have at the moment? How do you act in this environment?
Krishnan: Globally, the markets are still shaky. It is unlikely that we will have euphoric conditions in the near future. However, India as a market still looks attractive as the underlying economy has still got a lot of growth left in it.
The strategy is to identify high quality companies with robust business models and healthy balance sheets. In 2010, I expect that companies will stand out on the basis of quality and stock specific performance will be far more pronounced than in the last two years.
e-fundresearch: What are the special challenges in this environment?
Krishnan: 1. Volatility – whereas the economy in India is reasonably delinked from global contagion, the financial markets are more tightly linked. It is a hard task to protect the portfolio from global negative sentiment.
2. Rising commodity prices and weak global demand – They look inherently inconsistent with each other. But this poses a challenge to profitability and hence stock valuations. We have to look closely at who has pricing power and ability to hold on to market position.
e-fundresearch: What objectives do you have till the end of the year and in the mid term for the upcoming 3 to 5 years?
Krishnan: This year, the objective is to outperform the benchmark by at least high single digit percentage points and to protect the positive performance achieved in 2009 if possible.
In 3-5 years, I would like Carlson India to be rated as one of the best funds in its category.
e-fundresearch: Do you model yourself on someone? Any ideals?
Krishnan: No – no ideals.
e-fundresearch: What motivates you in your job?
• I find the process of studying businesses emerge as success stories very stimulating and to identify winners is a challenge worth going after.
• To help investors achieve their financial goals and the sense of responsibility associated with the job is another motivating factor
• To be in a country on the cusp of a major once in a lifetime transformation and to be investing in that change is exciting as well
e-fundresearch: What else do you want to achieve or do you have any further aims as a fund manager?
Krishnan: To develop and sustain the fund as a top performing fund and also a consistent performer over many years.
e-fundresearch: What other profession would you have taken interest in, apart from becoming a fund manager?
Krishnan: I came into this profession quite accidentally – however, with the benefit of hindsight, I would not have gone into any other area. This has been highly stimulating intellectually and I would not like to imagine myself in any other role.
e-fundresearch: Thank you for the interview!