The portfolio management style and investment strategy of PMS is usually suitable for long term investments only as the beta i.e. correlation to market movement of PMS is usually more than one signifying that PMS returns are more volatile in nature; in rising markets, it shows more out-performance and similarly, in falling markets it shows more under-performance.
However, there are some PMS products whose investment strategies make those low beta products. These investments are the ones which show great endurance during tough market times and also have the potential to outperform in the long term.
1. Ambit Coffee Can
Below are some of the facts about this strategy :
Portfolio Type – “Concentrated portfolio of top 1% companies”
Fund Manager Name – Manish Jain
Investment Philosophy/Strategy –
Most good companies in India face disruptions which could be external disruptions (regulatory changes, competition intensifying, innovation, economic growth) or internal disruptions (capital misallocation, success planning, lack of systems and processes, change in senior management by way of retirement or resignation).
However, there are a handful of companies in India which have the capability to deliver earnings growth consistently in a tight band of 15% – 30% each year for more than a decade, regardless of any type of disruption that they face. The Coffee Can Philosophy shows commitment to such high-quality franchises that consistently sustain their competitive advantages over long periods of time despite being faced by challenges and disruptions at regular intervals.
Ambit’s Coffee Can PMS builds a portfolio of such companies which deliver long term consistency of earnings growth.
The following aspects of Ambit’s Coffee Can Philosophy help it outperform the broader markets by at least 500-700bps sustainably each year : –
A. Lower drawdowns during the market crash
B. Low churn in the portfolio
C. Low-cost structure
D. No need to time entry/exit from this portfolio
2. IIFL Multi-Cap Advantage
Below are some of the facts about this strategy:
Portfolio Type – Low Beta PMS with inbuilt Put Option
Fund Manager Name – Aniruddha Sarkar
IIFL Multi-Cap Advantage aims to target superior outperformance over the benchmark through concentrated sector or stock positions where stocks are mostly held for a long term, typically almost always over 12 months. The portfolio is comprised of 15-20 high-quality companies which are business leaders, have a strong management, low leverage and which offer a large margin of safety. Investments pertain to largely in 2 – 4 high conviction sectors.
Identifying companies within the high conviction sectors that have attractive business models, strong balance sheets, good corporate governance practices and run by excellent management teams. Significant Alpha Generation with Low Risk (Past portfolios have a beta of 0.7 – 0.8 which is lower than most mutual funds).
3. Marcellus Consistent Compounders
Below are some of the facts about Marcellus Consistent Compounders:
Portfolio Type – “Concentrated portfolio of top 1% of companies (Coffee CAN Investing)”
Fund Manager Name – Rakshit Ranjan
It identifies firms with high pricing power that helps sustain a wide gap between returns on capital employed and cost of equity. The portfolio aims to holds such firms for 8-10 years on average where healthy returns are generated with volatility like that of a government bond.
Portfolio construction involves a two-stage process:-
1. Filter based approach to
2. In-depth bottom-up research of such companies in the universe to assess sustainable competitive moats to build a portfolio of 10-20 stocks that deliver healthy compounded earnings growth over long periods of time.
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