brics pms performance update - 15 oct. 2010
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MULTIPLE -STRATEGY TREND RATED
AUTOMATIC TRADING SYSTEM
Portfolio Management Services (PMS)
Performance Update
15 October 2010
Vivek Mavani – Vice President and Senior Portfolio Manager
BRICS Growth Synopsis
BRICS Growth is a Long only Diversified Equity Product aimed at generating Absolute Returns
The Objective is :
To generate Steady & Consistent returns over medium to long term
Maintain Low Volatility
Remain cautious on Margin of Safety
The Focus is therefore on Stock Picking with a Buy and Hold philosophy
Invest in high quality and high growth companies at reasonable valuations and hold them
over a period of time. (Not trade in & out frequently)
Our conservative approach to managing investments, (especially during periods of volatility) is
reflected in our superior performance.
Portfolio Update and Outlook
Most market participants this time seem Bullish but “Reluctantly” and have been skeptical
throughout. Rarely has a correction been anticipated so strongly by a very large section of the
market
Dilemma in a Bull Market. Choice between:
Losing an Opportunity in a fast rising market
Losing money in event of an anticipated sharp correction
We are clear in our Choice. This could/will lead to short term underperformance against the
benchmark’s but We will “Stick to Our Convictions” and “Not Act on Emotions”
Last month, we increased the weightage of large caps by increasing the exposure to Large Cap
Banks, to play the momentum. We swiftly booked profits also especially in Axis Bank. We may
look to buy it again on declines
We may, to capitalize on few momentum opportunities deploy a part of the portfolio (<15%) to
ride the momentum in stock ideas where we have strong conviction
Mid-caps had very sharp run-up in the last few months. We significantly reduced our exposure in
this segment, by booking part profits especially where valuations look stretched
However, selectively mid-caps could continue to see sharp rallies as individual performances are
likely to shine amidst a range bound market
However, Credo of Sticking to Quality remains and will never be compromised
Absolute Performance – 15 October 2010
Inception Date: 1 October, 2009 Portfolio returns are audited and net of fees & expenses
Weekly Monthly QuarterlyHalf
Yearly
YTD
(Calendar)Annual
Since
Inception
BRICS Growth -0.77% 2.95% 17.69% 32.73% 41.66% 53.23% 53.70%
NIFTY -1.97% 3.32% 12.58% 14.83% 16.43% 18.53% 19.12%
SENSEX -1.82% 3.19% 12.37% 14.09% 15.23% 17.04% 17.45%
S&P CNX 500 -1.77% 2.75% 11.78% 14.57% 15.38% 19.91% 21.26%
S&P CNX
MIDCAP-1.49% 2.31% 11.93% 17.97% 25.74% 32.88% 39.53%
Consistency in our Month-on-Month Performance
Month BRICS Growth Nifty Sensex S&P CNX 500 CNX Mid Cap
Oct-09 -0.67% -7.31% -7.23% -6.46% -1.77%
Nov-09 2.79% 6.81% 6.48% 7.59% 8.65%
Dec-09 6.27% 3.35% 3.18% 4.43% 3.97%
Jan-10 -1.84% -6.13% -6.34% -4.00% -3.11%
Feb-10 0.75% 0.82% 0.44% -0.69% -0.48%
Mar-10 6.24% 6.64% 6.68% 4.50% 7.50%
Apr-10 3.77% 0.55% 0.18% 1.27% 4.62%
May-10 1.86% -3.63% -3.50% -3.24% -3.79%
Jun-10 5.81% 4.45% 3.83% 4.59% 4.83%
Jul-10 3.84% 1.04% 1.56% 1.23% 3.50%
Aug-10 7.25% 0.65% 0.58% 1.39% 3.14%
Sep-10 4.13% 11.35% 11.67% 8.55% 5.58%
Performance ahead / at least keeping pace with the Indices month after month
The comparison includes 250 Diversified Equity Funds across all Fund Houses
Ranked on 3 month returns
Compared to Top 20 Mutual Funds as of 15 Oct. 2010
Rank Scheme Name Performance
3 Months % 6 Months % 1 Year %
1 Templeton India Equity Income Fund - Growth 19.83 18.50 32.07
2 Religare AGILE Fund - Growth 19.59 12.74 20.82
3 Sundaram BNP Paribas PSU Opportunities Fund - Growth 18.16 26.66 N/A
4 Escorts High Yield Equity Plan - Growth 17.76 28.11 41.14
5 BRICS Growth 17.69 32.73 53.23
6 Templeton India Growth Fund - Growth 17.30 17.36 34.20
7 HSBC Unique Opportunities Fund - Growth 17.28 19.37 26.04
8 Religare Mid N Small Cap Fund - Growth 17.23 25.35 57.16
9 Sundaram BNP Paribas Rural India Fund - Growth 17.04 26.60 32.18
10 Kotak Lifestyle Fund - Growth 16.70 27.76 35.10
11 HSBC Midcap Equity Fund - Growth 16.66 20.21 33.36
12 Religare Mid Cap Fund - Growth 16.23 22.38 44.52
13 Reliance Quant Plus Fund - Ret - Growth 16.06 20.98 23.45
14 IDFC Premier Equity Fund - Plan A - Growth 15.88 23.04 46.25
15 SBI Magnum Sector Umbrella - Emerging Businesses - Growth 15.52 18.69 44.57
16 Reliance Long Term Equity Fund - Growth 15.20 23.86 39.59
17 IDFC Strategic Sector (50-50) Equity Fund - Plan B - Growth 15.19 20.49 21.45
18 Sundaram BNP Paribas Select Midcap - IP - Growth 15.16 23.50 34.42
19 IDFC Strategic Sector (50-50) Equity Fund - Plan A - Growth 15.16 20.44 21.42
20 Kotak Midcap Fund - Growth 15.15 25.29 40.53
The comparison includes 250 Diversified Equity Funds across all Fund Houses
Ranked on 6 month returns
Compared to Top 20 Mutual Funds as of 15 Oct. 2010
Rank Scheme Name Performance
3 Months % 6 Months % 1 Year %
1 BRICS Growth 17.69 32.73 53.23
2 Escorts High Yield Equity Plan - Growth 17.76 28.11 41.14
3 Kotak Lifestyle Fund - Growth 16.70 27.76 35.10
4 Sundaram BNP Paribas PSU Opportunities Fund - Growth 18.16 26.66 N/A
5 Sundaram BNP Paribas Rural India Fund - Growth 17.04 26.60 32.18
6 Birla Sun Life Dividend Yield Plus - Growth 15.03 26.36 38.79
7 Sahara Wealth Plus Fund - VP - Growth 14.22 25.44 30.90
8 Religare Mid N Small Cap Fund - Growth 17.23 25.35 57.16
9 Kotak Midcap Fund - Growth 15.15 25.29 40.53
10 Sahara Wealth Plus Fund - FP - Growth 13.97 24.89 29.81
11 Canara Robeco FORCE Fund - IP - Growth 15.12 24.54 40.67
12 Canara Robeco FORCE Fund - Ret - Growth 14.98 24.49 40.51
13 DSP BlackRock Small and Midcap Fund - Growth 14.71 24.40 47.56
14 Reliance Long Term Equity Fund - Growth 15.20 23.86 39.59
15 DSP BlackRock Micro Cap Fund - Reg - Growth 9.81 23.77 67.00
16 Sundaram BNP Paribas Select Midcap - IP - Growth 15.16 23.50 34.42
17 HDFC Equity Fund - Growth 14.73 23.31 34.40
18 Sundaram BNP Paribas Select Midcap - Growth 14.99 23.16 34.07
19 IDFC Premier Equity Fund - Plan A - Growth 15.88 23.04 46.25
20 UTI Master Value Fund - Growth 13.40 22.91 47.06
The comparison includes 250 Diversified Equity Funds across all Fund Houses
Ranked on 1 year returns
Compared to Top 20 Mutual Funds as of 15 Oct. 2010
Rank Scheme Name Performance
3 Months % 6 Months % 1 Year %
1 DSP BlackRock Micro Cap Fund - Reg - Growth 9.81 23.77 67.00
2 Religare Mid N Small Cap Fund - Growth 17.23 25.35 57.16
3 BRICS Growth 17.69 32.73 53.23
4 Reliance Equity Opportunities Fund - Growth 13.27 22.13 48.47
5 DSP BlackRock Small and Midcap Fund - Growth 14.71 24.40 47.56
6 UTI Master Value Fund - Growth 13.40 22.91 47.06
7 IDFC Premier Equity Fund - Plan A - Growth 15.88 23.04 46.25
8 HDFC Mid-Cap Opportunities Fund - Growth 12.88 21.31 45.10
9 SBI Magnum Sector Umbrella - Emerging Businesses - Growth 15.52 18.69 44.57
10 Religare Mid Cap Fund - Growth 16.23 22.38 44.52
11 Canara Robeco Emerging Equities - Growth 10.69 20.54 43.87
12 IDFC Small & Midcap Equity Fund - Growth 12.03 19.31 42.53
13 ING Dividend Yield Fund - Growth 12.90 22.62 42.03
14 ICICI Prudential Discovery Fund - IP - Growth 10.81 17.20 41.38
15 Escorts High Yield Equity Plan - Growth 17.76 28.11 41.14
16 Canara Robeco FORCE Fund - IP - Growth 15.12 24.54 40.67
17 Tata Dividend Yield Fund - Growth 13.16 21.75 40.54
18 Kotak Midcap Fund - Growth 15.15 25.29 40.53
19 Canara Robeco FORCE Fund - Ret - Growth 14.98 24.49 40.51
20 HDFC Core & Satellite Fund - Growth 13.59 18.62 40.26
BRICS Growth NAV Trend
BRICS Growth has delivered absolute &
consistent returns during both periods:
Managed a significant out-performance
in a range bound volatile market
Managed to keep pace even during a
sharp rallies
Performance
Between 1 Oct.
2009 – 25 May
2010 *
Between 25 May
2010 – 15 Oct.
2010
Range bound
markets with
volatility
Sharp rally
across the board
BRICS Growth 15.70% 32.84%
Nifty -5.44% 25.98%
Sensex -6.50% 25.61%
S&P 500 -2.84% 24.81%
CNX Mid-Cap 10.32% 26.47%
* 25 May 2010, Indices bottomed out, when the
current rally started.
85
90
95
100
105
110
115
120
125
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135
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155
160
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BRICS Growth Nifty Sensex
S&P 500 CNX Midcap
BRICS Growth NAV v/s Indices (normalised)
BRICS Growth Outperformance
Performance has been a result of our:
Stock Picking
Low churn in the portfolio, and
Conservative attitude (not taking
excessive risks)
Our Strategy has been to :
Buy during panics/declines
Use sharp rallies to partially book
profits
Opportunistically ride the momentum
for a part of the portfolio (<15%)
Remain adequately liquid at all times
Adequate liquidity helps :
Protect against volatility
Provides enough courage and
conviction to buy into panics
Current cash/liquid balances ~ at 37% of
the Portfolio
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
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Nifty Sensex S&P 500 CNX MidCap
BRICS Growth NAV Outperformance vis-a-vis Indices
Portfolio Breakup
Large Cap. More than Rs 5,000 crores
Mid-Cap. Rs 1,000 - 5,000 crores
Small Cap. Less than Rs 1,000 crores
Large Cap39.28%
Mid Cap7.33%
Small Cap16.85%
Cash36.54%
Market Cap BreakupBanking & Finance13.07%
Branded Garments &
Retail14.77%
Cash36.54%
FMCG8.60%
Infrastructure & Capital Goods9.94%
Media4.18%
Oil & Gas12.90%
Sectoral Allocation
Low Portfolio Turnover (Buy & Hold at work)
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10
tim
es
Portfolio Turnover
Portfolio Turnover
Turnover increased as
we booked profits in
stocks that witnessed
very sharp rallies
How did we do during periods of Volatility – 12 Biggest Falls between Oct.-’09 – Oct.-’10
How much a portfolio falls during a
correction / sharp downturn is as
important as how much it gains in a
bull market
Protecting capital is often more
important during periods of volatility
Downside protection equally
contributes to superior returns over a
period of time
We have managed to fall less than
the indices during each of the sharp
falls / panics since our inception
Large liquidity during periods of
volatility & a low beta portfolio helped.
*Beta measures the volatility of the
portfolio relative to the index
Against Nifty Sensex CNX
Midcap
Beta * 0.4201 0.4187 0.4648
Date
Points
Fall -
Nifty
% Fall -
Nifty
Points
Fall -
Sensex
% Fall -
Sensex
% Fall -
BRICS
Growth
27-Jan-10 -159.65 -3.19% -490.64 -2.92% -2.29%
3-Nov-09 -147.80 -3.14% -491.34 -3.09% -0.36%
19-May-10 -146.55 -2.89% -467.27 -2.77% -0.84%
25-May-10 -137.20 -2.78% -447.07 -2.71% -1.62%
5-Feb-10 -126.70 -2.61% -434.02 -2.68% -0.47%
27-Oct-09 -124.20 -2.50% -387.10 -2.31% -0.65%
21-Jan-10 -127.55 -2.44% -423.35 -2.42% -1.32%
1-Jun-10 -116.10 -2.28% -372.60 -2.20% -1.24%
26-Nov-09 -102.60 -2.01% -344.02 -2.00% -0.95%
7-Jun-10 -101.50 -1.98% -336.62 -1.97% -0.99%
15-Oct-10 -121.85 -1.97% -372.59 -1.82% -0.77%
4-Feb-10 -86.50 -1.75% -271.10 -1.64% -0.28%
Market Outlook
Global macro economic risks will continue to weigh on the markets. Will definitely have
repercussions on India over a period of time, if not in the short term
Global liquidity flooding Indian markets has been the primary reason for the current rally across
all emerging markets. Ride till funds flow
Valuations are definitely not cheap, in fact they already look rich in some sectors. If the current
momentum continues, Valuations could become a concern as they could get into bubble zone
In some sectors/stocks valuations already factor in fairly aggressive growth rates for FY11
& FY12. Corporate performances could potentially disappoint given very high expectations
Price corrections from current high levels could be very sharp, if earnings disappoint
Serious concerns will start when the liquidity driven rally takes even the stocks with bad/doubtful
fundamentals to new high’s
Early signs of euphoria emerging as witnessed from the over subscription of IPO’s. The large
pipeline of IPO’s itself could be a dampener for secondary markets as significant quantum of
funds could be diverted
Pockets of opportunities still available in those stocks/sectors where growth is steady and
valuations still leave room for upside. Better still wait for a correction for fresh entry.
We continue to remain cautious of the market levels/individual stocks prices and valuations. We
would wait for a decent correction before committing significant funds
Our Strategy
“Time” in the markets is more important than “Timing” the markets
Superior long-term sustainable returns are not made by timing the markets in terms of selling at
the peaks. They are a result of purchase prices that are attractive in terms of valuations with
adequate margin of safety
Our strategy going ahead would continue to be, bottom up stock picking and be extremely
selective:
Buy on declines
Use sharp rallies to partially book profits
Opportunistically ride the momentum for only a small part of the portfolio
Remain adequately liquid at all times
The sectors that we are bullish are and continue to be over weight are all domestic themes
namely:
Banking & Financial Services,
Infrastructure Construction
Gas Transportation & Distribution
Domestic Consumption themes like Paints, Branded Garments, Media etc.
Thank You
Vivek Mavani – Vice President & Senior Portfolio Manager
vivek.mavani@bricssecurities.com
BRICS SECURITIES LIMITED
1st Floor, Sadhana House,
570, P. B. Marg,
Behind Mahindra Towers,
Worli, Mumbai – 400 018.
Tel: 91-22-6636 0000.
Happy Investing
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