PMS Funds - India

There are many indices to choose from. Nifty 50, Nifty Next 50, Nifty 100 Equal Weight, Strategic or Smart Beta, BSE 100, NSE 100, BSE 500, Sectoral or Special etc.

Nifty Next 50 although very volatile is a rewarding index as per the past data. Many investors have started embracing this index, as the AUM of the index funds for this index is increasing fast. ETFs are also available.

Nifty 100 equal weight index has all the companies with equal weight, so there is no threat of one company taking the index forward or dragging it down. This is a almost equally rewarding like Nifty Next 50 but will less risk. But there are no ETFs for this and only 2 AMCs have index funds whose AUM is small.

1 Like

I find only ICICI Pru S&P BSE 500 ETF in this category. Is that what u mean?

It was launched recently in may-2018 but based on Nifty jr and midcap index performance, we can say this is expected to have less volatility with slightly better returns than nifty.

Yes, I wasn’t sure about the exact name.
I don’t know about lower volatility or higher returns, but it certainty seems to be a better representation of the Indian market than the other ones. The expense ratio needs to be lower though, for it to be a truly attractive option.

Very informative thread , made me think a lot. I have been investing all my savings last 4 years in equities and been able to make an corpus of 2 cr ( even after 30 % correction from top , total amount invested is 80 lakhs ) … Is it better to go on investing as I did in small caps mostly based on different blogs online ? (Made most of my money by following Valuepick blog but that blog is not active anymore ) .
Reading different comments on this thread I researched about Samit Vartak and Sageone Investments and liked his PMS very much. I was impressed with the fact that he had warned of high valuations from Sep 2017 and had stopped taking money in his PMS. Presently he is taking new subscription( charges about 2.5-3% annually) but If I do opt for him it would mean I will have to give him all my net worth. Im 35 years old and have a well paying job , so I guess I can take the risk. Im quite confused wether to go on doing what I was doing or to take professional help. Would appreciate views .

2 Likes

Congratulations!!! For having a good track record and performing well in current carnage.

Your performance is far better than Sageone PMS Performance. Could you focus some light on what made you to move for Sageone PMS.

Also if possible could you please provide details on your current portfolio. It will be much helpful for forum members if you able to share your journey and investment philosophy.

1 Like

I dont think I can take too much credit for my performance other than the fact that I started in 2014 when not many people were interested and I was very brave in my allocation. Whatever I learnt was due to ValuePicks blog ( wish he was still active ). Just to give a brief background when I started investing I ensured I dont have any other financial liabilities. I sold off the properties I had invested in and foreclosed the home loans in 2014 itself ( I realised there was no return after paying interest on home loans ).
I made most of my money in following :

  1. V2 retail ( had invested 10 lakhs at 35 , exited most of my holding at 400 )
  2. Gujarat Borosil ( Bought at 12 sold at 110 )
  3. WaterBase ( Bought at 60 , sold at 400 )
  4. Apollo pipes ( Bought at 170 , still holding )

Currently holding Piramal, SQS , Kingfa , some V2 , Apollo pipes , Apollo tricoat, Shemaroo, Avanti feeds .

Had few loosers as well. The point is these were all micro cop turnaround stories which no sane analyst will touch for obvious reasons and I had placed big bets on them. So I would say I was lucky and this cannot go on forever… Rather I would be happy if my present corpus compounds at 20 % rate for next 10 years and hence was looking for a level headed fund manager without too much risk. I did give thought to Mutual funds but usually they are too diversified for my liking. Found PPfas quite concentrated and good record so have started investing there last few months.
Hope I am taking the I right decision for looking for a fund manager.

3 Likes

If you could elaborate on your thought process and investment thesis while choosing those companies, it would help us all very much. Like what positives did you see, what risks did you perceive (if any) etc.

Apart from pure luck, I believe with time and experience we can get better at investing, so I would like to know about your thoughts.

1 Like

Why cant/dont you reach out to the blog owner and ask him if he would consider a paid service ?
As a blogger you want more people to agree with you and buy the stocks you are buying after all its the market and you want to be first and then the crowd to follow you

@ChaitanyaC - Well I understood the risk of loosing my whole capital . One major point that I was always looking was value in terms of present business and future potential. E.G V2 at 35 had a market cap of 100 crores and sales closed to 300 crores , with even increasing stores I placed a bet on the fact that their Nos will improve fro here on. Gujarat Borosil was closed to turning around when I bought ( very minimal losses ) . Basically I would see that the market cap is ridicoulusly low for the amount of business the company is doing. Mind you , the rerating will only happen if the company actually turns around and it might take years . Most of the time it won’t happen.
For more insights you can go through the old posts in www.value-picks.blogspot.com
Again…I have realised I cannot go on investing all my networth in these kind of compaies. When the market corrects the correction is brutal. My portfolio came down from 2.9 cr in Jan 2018 to presently 2.1 cr .

2 Likes

@edwardlobo If value picks started a paid service I would be the first person to subscribe. Lot of people had asked him to but he had refused saying he’s just helping retail investors for free.
He has given so many multi bagger picks in his blog that I have actually lost count. So even if he had probably bought before recommending on his blog it dint matter to me.
Though he is not active anymore one can read his old posts at www.value-picks.blogspot.com just for learning. I think his posts and comments are excellent learning material.

1 Like

Value Pick - One of the best blogs but not active now.Just browse through his old posts and you can see if you had followed his recommendations and bought it , you would be wealthy enough.
I have not seen anyone like him who had spotted the opportunities way before many so called big analyst.

He used to give some hints through twitter after the blog became inactive but that seems to be over too.
I was a follower of his blog for many years.

Only thing I know is that he is from Kochi - Kerala and he is been in stock market for close to 20 Years.

@ Birsha_Haldar
Very few people know that during the crash of 70s, after which waren came up with this statement : “From sex-starved man on a desert Island to over-sexed guy in a harem” his portfolio was down 50%

Ups and downs are part of life. If you hit 6 for every ball in cricket, you will enjoy for a few days and then it will be boring

Market downs test your true character. You learn a lot about yourself, why some scripts do better, you get humble. I am slightly philosophical but read 20 books on value investing and you will know something or the other than go through the threads of value-picks to see what he found, why he recommended it. Given what these books say, will you have done the same

2cr if it returns you one cr every year, if it lost that much, surely it has capability to earn that much, is a lot of money. Treat it as a new job or a new business.

No business runs without some form of loss, no employment continues without some time off or redundancy which should stocks be different.

1 Like

@edwardlobo I understand your point , but please understand this is all I have. I do not have any other asset like properties or FD or Investment policies to back me up if this goes wrong . This is the reason I am thinking wether its a good idea to hand this corpus over to a good fund manager and continue my learning/investing with the future investible surplus I will generate with my salary.

1 Like

Uderstoond @Birsha_Haldar
From what I know most pms suffered the same fate like everyone else
And the irony is they still earn 1pc fees
Ask other members their feel on the companies you own
You’ll get very good feedback and go through the threads of those companies, you’ll know everything there is to know
Each company should take a day of reading up
That’s all really you can do at the moment other than wait for this correction to end

From an asset allocation point of view, investing your full net worth in equities is a high-risk, high-reward bet. And investing with just one fund manager (and paying substantial fees) makes it even more so.
If I were in your position, I would firstly look for better market valuations before investing all my savings in equities, and even then might look to distribute among 2-3 funds.
PS: If you are looking for conservative managers, PPFAS makes a lot of sense. Highly recommended.

I understand what you are going thru… I have been through same journey right through 2008 - 2015 . In 2015 I became full time investor .

There are pros and cons of direct investing , but if you enjoy studying business and seeing fruit of your labour in measurable terms , then there is nothing like direct investing .

PMS or Mutual funds are for those you don’t like to study business or don;t have time for the same. You need to take this call all by yourself .

After self introspection If you decide to do direct investing … I have put across some guidelines which worked for me … Portfolio Analysis - Shailesh . Hope you find this info useful .

Thank you for sharing your process for investing in those companies, also I could see that you have invested early in those companies (the price you have bought), so they become multibaggers.

I will check that blog you have mentioned.

Do you want to preserve what you have accumulated and compound it slow but with absolution, I believe you don’t need no advice and you can do that on your own. But if you want it to grow by 20% as you have mentioned by taking some risk, you can go with a financial planner but he may not grow your money faster than a PMS, but I think your corpus will be protected with perhaps some volatility. Or you could make allocation even for this corpus and preserve some of it in pure debt instruments. I guess it all boils down to what exactly do you want with this accumulated corpus, completely preserve it or young so take risk with a portion of it etc.

Following are snippets from SageOne Oct Newsletter

Portfolio Positioning
We have seen earnings growth picking up for our portfolio. Almost half of our concentrated
(SCP) portfolio allocation is towards export-oriented companies who would be net
beneficiaries of the INR depreciation. These are companies in which we have invested before
the INR depreciation started and they have been growing above our targeted rate since then
and are not dependent on INR benefits. Most of these companies are constrained by capacity
and not by demand.

export-oriented companies

Our Strategy
Unless forced by regulations, there is no reason for an investor to be restricted by market cap.
Of course, liquidity has to be a consideration. Our mandate is to optimize returns, and that
can be done by finding the companies with best long-term earnings growth prospects and
buying them at reasonable prices. Given that our endeavor is to achieve earnings growth of
25% at the portfolio level, many of the large companies never fit the criteria due to their
large base.
It’s improbable that companies such as TCS, HUL or an Infosys which tend to grow
earnings in single digits will ever be part of the portfolio, even if in the short run there is a
possibility of enhanced returns due to valuations getting rerated. We don’t like to rely on
valuation rerating for returns.

large companies never fit the criteria

We completely believe in investing in high quality stocks, but it has to be accompanied by
high earnings growth, which generally is possible where the base is relatively small and the
companies can keep gaining market share from the competition.
My observation has been
that these kind of companies sustainably outperform not only the indices and the large cap
quality companies but also deliver higher absolute returns albeit with higher volatility
compared to large quality companies. If I had built a passive portfolio of such companies, the
earnings growth over the past 8 years as well as 4 years would have been around 18-19%.
Again because of the rerating, the returns would have been double of that.

RoC > 15

The above table is for a passive portfolio of about 25 stocks which also includes some of the
companies we have held in our portfolio in the past such as Bajaj Finance, Page Industries,
Amara Raja Batteries, PI Industries, etc. The key difference between this and the large cap
portfolio is the average size, which in this case was around INR 6,000-10,000 crs,
if you had
invested in these 3-4 years ago. We find this to be an optimal average size which provides
enough liquidity and good earnings growth potential. Accordingly, our portfolio average
company size falls in this range as it’s positioned from a 3-5 year perspective.
In the long run, the earnings growth of these companies would continue to be 6-7% higher
than similar large company universe and we all know what compounding can do to your
wealth with such superior returns.

Market Capitalization 3000Cr - 12000 Cr

What would be best Screener filter for his thesis?

Following search returns 93 companies, I find only Auto ancillaries and pharma which are export-oriented companies in this list.

Return on capital employed > 15 AND
Market Capitalization > 3000 AND
Market Capitalization < 12000 AND
Sales growth 3Years > 6

1 Like

How to invest NRI in Mutual funds…Please advise

For MF’s this is the best option https://www.mfuonline.com