Underweight on US since January; overweight on Europe, China & India: Devina Mehra

Devina Mehra, Founder & CMD, First Global, says their global funds have been underweight in the US since January, favoring Europe and maintaining overweight positions in China and India. Recent rebalancing in India included overweighting pharma and auto components, a strategy in place since early 2024. FMCG and banks have seen increased weight, with banks still remaining underweight despite recent additions. Let us shift focus to the Indian markets because when you joined us in March, the market sentiment was not that great and you believe that in this time where fear is actually gripping the market sentiment, it is a good time to invest. Stick with the largecaps and have a strategy. But from those levels, markets have already seen a good runup. How are you seeing the Indian markets and the fundamentals shaping up?Devina Mehra: I was looking at some of my podcasts from February which I had done after my book had been released. In everyone I have said the same thing that if you were waiting for a correction to invest, have you invested yet? It was when Nifty was in the 22,000 range. It has gone up since then. But my recommendation is to remain invested because one will have to look at a trade-off; what is the percentage and probability of the downside versus the percentage and probability of the upside? We are still in a good space in the largecap mainstream stocks. You have to be sector specific and stock specific. Having said that, it is not the time to be sitting out of the market. There is no good reason to do that because most of the time it makes sense to remain invested unless a crash appears imminent, which is not the case.

The statistic I have given before says that in 40-odd years, if you miss out on the 10 best days, you miss out on two-thirds of the return. So, your Rs 100 instead of being Rs 75,000 or so, would be Rs 25,000. That is the kind of risk of sitting out. You should not have 100% in equities, but is it a time to be invested as far as your equity allocation is concerned? The answer is yes.

In your book, you have advocated the thought of going global because if you are one market centric, there is a risk of your portfolio being concentrated in just one asset class. So, for this particular year, which market and which asset class can be the outperformer?Devina Mehra: A lot of people think globalising means buying a US index or buying half a dozen US stocks. Many funds also run on that strategy. In our global funds, especially since January, we have been underweight the US, we are overweight Europe. We had also increased our fixed income allocation but that has also been very volatile. We also have been overweight China from somewhere last year and we are slightly overweight India. That is broadly where we are as far as global funds are concerned.

We have just carried out our India rebalance because we do it every quarter. April end or so was a month. There also in terms of sectors, we have been overweight pharma and auto components from almost the beginning of 2024 and that continues. Pharma and healthcare in just percentage terms probably would be our highest overweight. In the last few quarters, we have been overweight FMCG. That is one area where we have been increasing weight. We have also increased weight in banks, but we are still not overweight there. We are still underweight but in the last couple of rebalances, we have added banks.