Abakkus Diversified Alpha Fund – Category III AIF


Key Portfolio Attributes

Sunil Singhania
Sunil Singhania

Fund Category: Category III AIF

Sub-Category: Long Only

Structure: Closed Ended

Fund Tenure: 5.5 years

Fund Manager’s Name: Abakkus Asset Manager LLP

Founder's Name: Mr. Sunil Singhania

Founder's Experience: Mr. Sunil Singhania has over 25 years of experience. Sunil Singhania, acclaimed for his financial acumen, has notably served as the CIO Equities of Reliance Nippon Life Asset Management, managing approximately USD 11 billion in equity assets. His expertise earned him a position on the Global Board of the CFA Institute, USA, and he was the Ex-Honorary Chairman of its Investment Committee in 2018-19. Currently a member of the IFRS Capital Markets Advisory Committee (CMAC) from 2020-2023, Singhania has been recognized as a top fund manager, securing accolades from platforms like Outlook Business in 2016 & 2017. His career is a testament to strategic financial management and influential leadership in the financial sector.

Founder’s Qualification: CA & CFA charter holder

Investment Objective

The investment objective of Abakkus Diversified Alpha Fund Cat III AIF is to generate alpha and wealth creation by investing with typically 3 to 5 years of holding period and adhering to their “MEETS” Framework.

The fund follows a benchmark agnostic diversified portfolio approach with bias towards mid and small caps. It invests in companies with strong fundamentals, scalable business models, and attractive valuations.The fund managers also consider the management quality, earnings potential, events/trends,and timings before making any investment decisions.

Abakkus Asset Managers' MEETS Framework

The fund’s “MEETS” Framework stands for:

  • Management: The fund managers assess the quality of the management team, including their track record, experience, and vision for the company.
  • Earnings: The fund managers analyze the company’s earnings potential, including its growth prospects, market share, and competitive landscape.
  • Events/Trend: The fund managers consider the upcoming events and trends that could impact the company’s performance.
  • Timings: The fund managers time their investments carefully to buy stocks at attractive valuations and sell them when they are overvalued.
  • Structural: The fund managers focus on the size of the opportunity along with competitive positioning & MOAT.

Investment Philosophy

The investment philosophy of the Abakkus Diversified Alpha Fund Cat III AIF, is underpinned by several guiding principles:

 1. Alpha Generators:

  • Abakkus Diversified Alpha Fund Cat III AIF strongly believes in the pursuit of generating alpha over merely aligning with the benchmark index. The objective is to outperform the average market returns.
  • Their focus is on growth companies, especially those whose profitability prospects are anticipated to surpass the market average.
  • They prioritize fundamentally underpriced stocks that present promising growth potential.
  • The fund also values mid-cap companies, particularly those with scalable business models that possess the potential to evolve into large-cap entities.

2. Fundamental Driven:

  • Abakkus Diversified Alpha Fund Cat III AIF’s approach is rooted in bottom-up research with a special emphasis on the balance sheet, signaling its commitment to sound financials.
  • They believe that numbers and hard data are more telling than presentations and promotional hype.
  • At its core, the fund believes that the ultimate metric of a successful investment is the earnings it generates.

3. Risk-Reward Equation:

  • Abakkus Diversified Alpha Fund Cat III AIF is risk-conscious and firmly believes that expected returns should be commensurate with the uncertainties and risks undertaken.
  • They hold the view that a good company doesn’t automatically translate to a good stock.
  • The focus is also on the price they pay for an investment and the value that is subsequently derived from it. They constantly assess the inherent value in the price of a stock.

4. Patient Investors:

  • Abakkus Diversified Alpha Fund Cat III AIF subscribes to a buy-and-hold strategy, reflecting its long-term investment outlook.
  • They approach stock investments with the mindset of investing in a business, underlining their commitment to the intrinsic value of the enterprise.
  • The fund thinks like a partner in the businesses they invest in, implying a deeper engagement and understanding of the companies.

5. Agile and Flexible:

  • Abakkus Diversified Alpha Fund Cat III AIF adopts a dynamic approach to investing, where each opportunity is assessed on its individual merit without a one-size-fits-all lens.
  • They are not bound by any specific investment theme or style, allowing for a diverse portfolio construction.

6. Contrarian:

  • Abakkus Diversified Alpha Fund Cat III AIF isn’t averse to swimming against the tide. They often prefer to be the first, early, or sometimes the sole investors in a particular venture.
  • They avoid getting caught up in market momentum, ensuring they make decisions free from herd mentality.
  • The fund maintains an open-minded approach, considering companies across various sectors, market capitalizations, and stages in the business cycle.

Investment Strategy

The Abakkus Diversified Alpha Fund Cat III AIF employs a unique investment approach and an investment strategy that sets it apart in the financial landscape. Central to its strategy is a benchmark-agnostic portfolio that comprises around 40 companies, ensuring a diverse blend of opportunities. Adopting a “Bottom Up” methodology, the fund places its bets on companies that showcase promising and decent profitable growth. A disciplined strategy is observed, with investments sprinkled across various market caps and sectors, ensuring a robust diversification. This fund is not just about quick gains; it leans heavily towards a value-conscious style of investing. At its core, the Abakkus Diversified Alpha Fund Cat III AIF believes in a low churn, long-term ideation-based investment approach. This dedication is evident in its endeavor to generate alpha, targeting a 3-5 year holding period, cementing its commitment to long-term growth. Further enhancing its allure, the fund strategically positions itself in select IPO investments, acting as an Anchor Investor, and involves itself in QIB and Pre IPO sectors. This comprehensive strategy makes the Abakkus Diversified Alpha Fund Cat III AIF a compelling option for discerning investors.

The fund is characterized by a unique 40:30:20:10 approach to portfolio construction, setting it apart in its asset allocation strategy – 40% allocation to large caps, 30% allocation to mid caps, 20% to small caps, and 10% to micro caps.

It actively captures opportunities across the broad spectrum of market capitalization, ensuring a diversified reach. One of its standout features is the ability to reduce volatility, achieved by having a pronounced exposure to both large cap and larger mid cap segments. At its heart, the fund is dedicated to alpha creation, and it does so by strategically focusing on the mid, small, and micro cap sectors. This attention to detail is mirrored in its robust risk discipline and management, which emphasizes the importance of position sizing. Moreover, the fund adopts a prudent approach to liquidit management.This is evident in its strategy of assigning incrementally smaller weights to companies with smaller capitalizations, ensuring balanced liquidity and risk management.

Awards & Achievements

Across Abakkus PMSs & AIFs

• In 2023, Abakkus Asset Manager Growth Fund-I, a Long Only Cat III AIF, was awarded Rank #2 in the Best Long Only Cat III AIF, on 3Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2023, Abakkus Asset Manager’s Emerging Opportunities Fund-I, a Long Only Cat III AIF, was awarded Rank #1 in the Best Long Only Cat III AIF, on 3Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2022, Abakkus Asset Manager Growth Fund-I, a Long Only Cat III AIF, was awarded Rank #2 in the Best Long Only Cat III AIF, on 3Y Risk-Adjusted Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• In 2021, Abakkus Asset Manager’s Emerging Opportunities Fund, a Long Only Cat III AIF, was awarded the winner in the Best Long Only Cat III AIF, on 1Y Absolute Returns. These Awards were hosted by PMS AIF WORLD, in association with IIM-Ahmedabad.

• Mr. Sunil Singhania has been revered as the amongst the Best Fund manager by Outlook Business in 2016 and 2017 over a 10-year time span.

• Reliance Growth Fund, a midcap oriented fund directly managed by Mr. Sunil has unique distinction of having grown over 100 times in 21 years. Also, the first fund in India to have a NAV of Rs. 1,000+.

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