PMS Funds - India


(Sarvesh Gupta) #219

Very simple sir - if you are able to see beyond the selling pressure seen in small and mid caps in the past 9 months, few simple facts will emerge :

a) globally and increasingly in India, mutual funds because of their large size of assets under management are underperforming the benchmarks. Basically investing in mutual funds doesnt make sense to most people, passive investing is much better but then the army of distributors and wealth managers who get paid by mutual funds will still make their HNI clients invest with them. Simply put it just doesn’t make sense to invest in any vehicle which has too much money as expected returns rapidly come down in inverse proportion to AUMs.

b) a small breed of fund managers will always beat the benchmark with such a large difference over long term due to compounding (despite higher fees) that it makes a lot of sense to invest with them. The problem is the find them but then many of fund managers are excellent sales person (and not excellent investors) and entrap the investors in HNIs through suave know-it-all demeanour and talks.

c) an HNI in many case is driven by greed particularly at the top of the cycle when he sees so many people like him minting money in the market and the fear of missing out is too strong. When porunju reports in January 2018 that 2017 has been a 70% year, it has an impact on everyone who was putting up with some safe equities or mutual funds making a paltry 15% - makes people move funds.

Bottom line is investing in pms/Aif/advisory makes a lot of sense but only when the horse you are riding on is good. If you are riding the wrong horse then it’s a bigger problem than being invested in a mutual fund where market returns are what one should expect and mediocrity is the order of the day in most cases.

Finding the right horse however is easier said than done as great sales people are seldom great investors and vice-versa in my opinion. God is rarely than unfair.


(KunalKothari) #221

I guess the trick is to find people who are likely to perform well in the long term, over cycles, and who are likely to provide a superior risk-adjusted return than index funds or mutual funds. It is not necessary that yesterday’s performers will necessary underperform in the future.
Mutual funds do have tax benefits now though (as compared to a PMS), as tax incidence for the investor is only when she eventually sells the fund.


(sambandham82) #222

Though Vanguard has proved that average MF return = Index return-expense ratio, are we sure that it worked that way in india also? Because i find as many as 8# ELSS funds from different companies, predominantly investing in blue chips, have outperformed nifty’s return of 13.6% and earned 16-17% returns in the last 10 yrs as per value research online data.

I considered ELSS funds as they may be indicating the long term investor’s (fund manager) portfolio performance as he is not under redemption pressure and also number of ELSS fund are relatively very less and easy to collect data.

I just want to know whether ELSS can outperform index or not.


(KunalKothari) #224

As I understand, S&P BSE 500 ETF is available, should be a good representation of our market, no?
The expense ratio seems to be 0.30%


#226

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.


(sambandham82) #227

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.


(KunalKothari) #228

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.


(Birsha Haldar) #229

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 .


(sainkar) #230

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.


(Birsha Haldar) #231

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.


#232

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.


(EL) #233

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


(Birsha Haldar) #234

@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 .


(Birsha Haldar) #235

@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.


(arunkp) #236

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.


(EL) #237

@ 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.


(Birsha Haldar) #238

@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.


(EL) #239

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


(KunalKothari) #240

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.


(Shailesh) #241

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 .