India's $3 billion female money manager favours a cautious approach
Sohini Andani became a fund manager in India despite her family's conservative background and now oversees $3.2bn in funds for SBI Funds Management
In June 1995, a young Sohini Andani showed up uninvited at the Mumbai office of K.R. Choksey, the broker and investor, and told him she wanted a job. She’d read about his investment process in a magazine.
“I somehow felt that this was the person I wanted to work with,” says Ms Andani, whose decision started a more than two-decade finance career - and ruffled feathers at home. “I came from a very conservative family, who didn’t believe that girls should study so much or go out for work, 20 years back at least. I stood against this and I said I wanted to work.”
Ms Andani, 46, had grown up middle-class in Mumbai, with a father who encouraged her independent nature and a family that was subsequently supportive of her endeavours. She’d developed an interest in financial analysis from a teacher who used companies’ annual reports in class. And in her mind, becoming the only woman in her department at Choksey’s firm was simply the right path. “From my childhood, I loved taking decisions,” says Ms Andani, who oversees $3.2 billion for SBI Funds Management in Mumbai.
For Ms Andani, the freedom to make choices comes with great responsibility. It’s made her a “cautious” money manager, constantly aware of her duty to protect investors’ cash. From the writings of Mahatma Gandhi and old Hindu scriptures, she formed other parts of her investment philosophy, such as being humble, admitting mistakes, making her best efforts and then letting things go. Put together, the approach has shaped Ms Andani into one of India’s most highly rated money managers.
She was “one of the top 10 best-ranked managers” in India as of August 2016, Morningstar wrote in a report, which says that women make up 7 per cent of the country’s money managers, versus at least 20 per cent in markets such as Hong Kong and Singapore. She’s “among few celebrated women fund managers who have carved a niche for themselves in the investing world", it wrote.
Yet Ms Andani’s cautiousness is at the heart of her latest challenge: to outperform in a raging bull market when you aren’t, by nature, a big risk-taker. While her flagship SBI Blue Chip Fund has beaten 92 per cent of peers over the past five years, it’s posted a 27 per cent gain in the last 12 months, versus a 29 per cent advance in its benchmark S&P BSE 100 Index.
A mid-cap fund she manages has risen 24 per cent in the past year, less than the 46 per cent surge in its benchmark gauge.
“It’s not that we haven’t done well in every rising market, but in a very high-momentum market, I tend to lag and there I am questioning myself a lot,” she says.
Domestic funds and foreign investors have bought a record $24bn of Indian stocks this year, heartened by reforms by prime minister Narendra Modi’s government, including the introduction of a nationwide goods and services tax. That’s propelled the S&P BSE Sensex to one of the best performances in Asia, made India the region’s most expensive market, and prompted Moody’s Investors Service to raise the country’s sovereign rating to the highest since 1988.
Ms Andani has seen such bull markets before. She landed a research job at Choksey’s shortly after she showed up at the door, and stayed until 1997. There, she learned how to identify companies that would create wealth for shareholders. She points to skin-care firm Pond’s (India), whose shares surged 142 per cent in 1997, the year before it was bought by Hindustan Unilever. She also learned the importance of putting clients first.
After a stint at an Indian unit of S&P Global, Ms Andani became a technology analyst at the height of the IT boom. Valuations were skyrocketing, and she describes it as “impossible” to see how companies could maintain their growth.
Following a number of other analyst jobs, she moved to the buy-side in 2006. In 2007, she joined SBI MF, a struggling mutual fund house that would become India’s fifth-largest money manager.
Ms Andani says she managed money from the start of her career, client portfolios with usually less than 5 million rupees (US$77,567). Her early move into tire companies at SBI MF helped make her name. She says the shares more than tripled after she bought them, but tripled again after she sold.
“One day I wanted to manage 2 billion rupees of money and that seemed to be a very big amount for me,” she says. “Today, I am managing in excess of 200 billion.”
Ms Andani says she takes a long time before buying a stock, looking at everything from the company’s management to its market opportunity and potential for profit growth. She holds investments for five or six years. Her SBI Magnum Midcap Fund counted Carborundum Universal, a manufacturer of abrasives, as its biggest position at the end of October.
Carborundum’s shares have risen 167 per cent since the end of June 2011, when Ms Andani’s fund first reported a holding, according to data compiled by Bloomberg. “I believe a lot in the compounding stories,” she says.
Somewhere along the line, Ms Andani became engrossed by the writings of Gandhi, the father of Indian independence. She was taken by his autobiography, The Story of My Experiments With Truth, and says she learned everything from the need to simplify and admit mistakes - which she says few people do - to how to manage people.
“Reading Gandhi’s book made me realise what it really takes to be a leader,” Ms Andani says. “As you go higher in your work, whatever you are doing, it is very important to take people along. You alone can’t do everything.”
Every Thursday, Ms Andani participates in meetings with colleagues to discuss ideas, where the views of all fund managers and analysts present, regardless of seniority or experience, have equal weight, she says.
In the Bhagavad Gita, a scripture that also fascinated Gandhi, Ms Andani found another element of her investment philosophy: making your best effort at a task and then accepting the outcome. That, she says, helps her handle work stress.
“A job of a security guard is no less than mine as a fund manager as long as he gives it his best,” Ms Andani says. “That’s the philosophy of Gita. When you do your job in the best possible manner, your anxiety for the result goes away. Your pleasure is in the journey and not the destination.”
Perhaps that’s why she’s not too worried about missing rallies in telecommunication and non-bank financial companies this year. She says she found the finance firms “pretty risky” and didn’t think they would sustain their rally. At the same time, she’s not dismissive of the need to improve for clients.
“In a high-momentum bull market, if I underperform, it’s OK, because I give a little less returns than my peers, but in a down market, if I protect their money better, I would consider myself a better fund manager,” she says.
Updated: December 2, 2017 05:57 PM