Back in 1994, Umesh Kamath had a choice. He could either join his family business of manufacturing PVC pipes or respond to the call from the world of investments.

He chose the latter and now manages six funds with a total corpus of Rs 255 crore. And he doesn't regret it one bit.

Investments are his first love and Kamath would not trade the fast-paced and dynamic world of equities for anything. So right out of T A Pai Management Institute, Manipal in 1993 where he majored in finance, Kamath was clear that he would test his theoretical skills in a top financial institution.

A brief stint in GIC Housing Finance [Get Quote] in the credit appraisal department and he was ready for the big break. Canbank Mutual Fund was looking for a research analyst in equities and Kamath for an opening.

The next three years would see him visiting plants, interacting with managements in fields ranging from cements to shipping. A major part of his current skill set of evaluating managements and judging their performance were sharpened during this tenure. With a firm foundation in company analysis, he was now ready to dance with the sharks.

Buy, sell, buy, sell, buy...

"Trading is not just about execution, a buy or a sell decision," says Kamath. It goes way beyond that. An equity dealer, Kamath realised, acts as a critical link between the markets and the fund manager.

Interaction with the panel broker, discussions with traders and market feedback were a key part of the job. It is this feedback on market movements that forms the basis for buying and selling decisions. For Kamath, the interaction with the markets could not have come at a better time.

The tech boom was reaching a crescendo and Kamath got a taste of what irrational exuberance was all about and why a trough follows a spike. Lessons learnt, Kamath moved on to managing funds, first, equity for two years and later debt funds at a time when the rising interest rates were causing a turmoil in the markets.

"At nearly Rs 500 crore, the corpus was five times my equity AUM, so the assignment for someone with no experience in handling debt was stiff," he says. It is here that his CFA certification from the ICFAI Institute came handy.

Back to school

Like a keen student who is always trying to make sense of the subject he is trying to master, Kamath, too, wanted to understand the components that form the investment universe, how they interacted and what were the outcomes. He had the opportunity to analyse equity, debt, investment statistics, economics and forex markets in the course.

"I borrowed heavily from the knowledge gained from ICFAI and applied various strategies that I learned," he says. For Kamath, this knowledge couldn't have come at a better time.

Canbank Mutual's VRS left a vacuum in the debt portfolio and Kamath was entrusted the responsibility of steering the fortunes of Cangilt and CanIncome.

"The strategy during those difficult times was simple. Get out of illiquid securities, get into securities that gave higher returns and actively manage duration."

Kamath looks back at this stint with pride because this was a challenge and he wanted to make it count. His skills and expertise is however not limited to debt. In January 2006, he was put in charge of six equity schemes - Caninfrastructure, Can Emerging Equity, Can Growth Plus, CanD'mat, Canbalance and Canbalance II.

The last fund has a five star rating from Value Research and is a top performing fund in the balanced category. While its benchmark, Crisil Balanced has returned 3.8 per cent over the last six months, Canbalance II has given 8.8 per cent.

On the disappointing returns for other funds in his portfolio, Kamath says that the reversal in midcap prices was responsible. His strategy for his funds is more conservative than aggressive.

"Managers should be balanced in their approach to investments and should not be taken in by hype," says the 36-year-old fund manager.

Look into the future

"Earnings visibility is key to evaluating stocks," says Kamath adding that sectors such as capital goods, IT and cements in addition to construction have a good earnings visibility currently.

Even though there are growth possibilities, he is wary of company managements, which promise the sky and fail to deliver. The ability to deliver and stick to the return commitments given are crucial as this forms the basis for decisions on stocks. An active management is able to explore and take advantage of opportunities.

"The quality of management decides valuations and the price of stocks," he says. Like the majority of his peers in the field, Kamath adopts a bottom up strategy. "Fundamental analysis tells me what to buy while technical charts give clues to the timing of purchases," says Kamath.

But what does one do when the markets are as choppy as they are now? Kamath believes in the maxim: when in doubt, play safe. He prefers large-caps when the markets fall or are range bound and small and mid-caps when the bulls take charge. And experience tells him that the decision to sell is as important as buying.

"You should have a selling strategy based on returns, trailing stop loss and on events that might impact the earnings of companies in your portfolio," he says.

Markets at an arm's length

When he is not figuring out the growth prospects of companies and wishes to forget the markets for a while, Kamath tries his skills at table and lawn tennis. His two kids aged seven and four take up the rest of his time.

Question him on retirement and Kamath like his peers sticks to the usual. "I take things a day at a time and with so much happening in the markets, who is worried about two decades into the future," he says.

But we believe that this god-fearing conservative fund manager would be mulling over the hits and misses on his roller coaster career at the markets as the sun goes down in Koteshwar in Udipi.