brics pms performance update 15 sept. 2010
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MULTIPLE -STRATEGY TREND RATED
AUTOMATIC TRADING SYSTEM
Portfolio Management Services (PMS)
Performance Update
15 September 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:
Generate Steady & Consistent returns over medium to long term
Low Volatility
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
Since the last update, (August, 2010) the portfolio has been realigned keeping in mind the changed
view from being defensive to being slightly aggressive
Increased the weightage of large caps by increasing the exposure to Reliance Industries and
Large Cap Banks (Axis Bank and ICICI Bank)
During a market correction, mid-caps generally, witness a sharper correction. Therefore, we
reduced our exposure to mid-caps by booking profits in some our holdings which had very sharp
rallies. It is to reduce the portfolio volatility, (at least partly).
Cash levels this month are lower than last month
As we opportunistically deployed the surplus cash to ride on the momentum, and,
as the invested portfolio value has increased, (cash had obviously not)
Credo of sticking to Quality remains and will never be compromised
Can stick to this credo as we see no serious compulsion to deploy funds at higher levels.
Wouldn’t mind sitting it out for a while than take undue risks
Global macroeconomic risks remain and we are cautious of the same as highlighted repeatedly
in the previous updates. However, capitalizing on the opportunity to play the momentum for at
least part (<15%) of the portfolio
Absolute Performance – 15 September 2010
Inception Date: 1 October, 2009 Portfolio returns are audited and net of fees & expenses
Weekly Monthly Quarterly Half YearlyYTD
(Calendar)
Since
Inception
BRICS Growth 2.33% 5.29% 21.68% 31.43% 37.60% 49.30%
NIFTY 4.51% 7.50% 12.23% 14.27% 12.69% 15.30%
SENSEX 4.48% 7.35% 12.00% 13.62% 11.67% 13.81%
S&P CNX 500 2.98% 6.23% 12.67% 14.83% 12.29% 18.02%
S&P CNX MIDCAP 1.16% 4.87% 14.66% 22.27% 22.90% 36.38%
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%
Performance ahead of benchmark 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
Rank Scheme Name Performance
1 Mth % 3 Mths % 6 Mths %
1 IDFC Premier Equity Fund - Plan A - Growth 6.03 21.86 29.58
2 Brics Growth 5.29 21.68 31.43
3 Reliance Equity Opportunities Fund - Growth 8.49 20.07 29.58
4 HDFC Equity Fund - Growth 7.10 18.31 26.22
5 Franklin India High Growth Companies Fund - Growth 8.09 17.50 16.35
6 HDFC Long Term Equity Fund - Growth 7.50 17.44 25.26
7 HDFC Growth Fund - Growth 8.15 17.41 26.00
8 Canara Robeco Emerging Equities - Growth 4.22 17.39 27.93
9 Quantum Long-Term Equity Fund - Growth 7.61 17.31 24.14
10 SBI Magnum Global Fund 94 - Growth 6.54 17.08 24.27
11 DSP BlackRock Opportunities Fund - Growth 8.08 17.07 25.10
12 DSP BlackRock Equity Fund - Growth 6.91 16.98 22.42
13 Kotak Emerging Equity Scheme - Growth 5.85 16.62 24.57
14 Morgan Stanley A.C.E Fund - Growth 6.71 16.26 19.77
15 Templeton India Growth Fund - Growth 9.49 16.12 17.83
16 Fortis Future Leaders Fund - Growth 6.28 16.10 28.64
17 Tata Select Equity Fund - Appr 7.65 15.82 17.62
18 JPMorgan India Equity Fund - Growth 7.42 15.63 21.33
19 Franklin India Opportunity Fund - Growth 5.97 15.23 16.80
20 Morgan Stanley Growth Fund - Growth 6.18 15.09 16.85
The comparison includes 250 Diversified Equity Funds across all Fund Houses
Ranked on 6 month returns
Compared to Top 20 Mutual Funds
Rank Scheme Name Performance
1 Mth % 3 Mths % 6 Mths %
1 Brics Growth 5.29 21.68 31.43
2 IDFC Premier Equity Fund - Plan A - Growth 6.03 21.86 29.58
3 Reliance Equity Opportunities Fund - Growth 8.49 20.07 29.58
4 Fortis Future Leaders Fund - Growth 6.28 16.10 28.64
5 Canara Robeco Emerging Equities - Growth 4.22 17.39 27.93
6 HDFC Equity Fund - Growth 7.10 18.31 26.22
7 HDFC Growth Fund - Growth 8.15 17.41 26.00
8 HDFC Long Term Equity Fund - Growth 7.50 17.44 25.26
9 DSP BlackRock Opportunities Fund - Growth 8.08 17.07 25.10
10 Kotak Emerging Equity Scheme - Growth 5.85 16.62 24.57
11 SBI Magnum Global Fund 94 - Growth 6.54 17.08 24.27
12 Quantum Long-Term Equity Fund - Growth 7.61 17.31 24.14
13 Fidelity Equity Fund - Growth 6.87 14.87 23.46
14 DSP BlackRock Equity Fund - Growth 6.91 16.98 22.42
15 ICICI Prudential Fusion Fund - IP - Growth 5.73 14.00 22.31
16 Fidelity India Growth Fund - Growth 7.02 14.65 22.27
17 Escorts Growth Plan - Growth 2.75 12.20 22.10
18 JPMorgan India Equity Fund - Growth 7.42 15.63 21.33
19 Birla Sun Life Long Term Advantage Fund - Growth 6.96 14.79 20.74
20 Franklin India Prima Fund - Growth 5.83 15.06 19.97
BRICS Growth NAV Trend
BRICS Growth has delivered absolute &
consistent returns during both periods:
Performance has been a result of our :
Stock Picking
Low churn in the portfolio, and
Conservative attitude (not taking
excessive risks)
85
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BRICS Growth Nifty Sensex
S&P 500 CNX Midcap
BRICS Growth NAV v/s Indices (normalised)
Performance
Between 1 Oct.
2009 – 25 May
2010 *
Between 25 May
2010 – 15
Sept.2010
Range bound
markets with
volatility
Sharp rally
across the board
BRICS Growth 15.70% 29.04%
Nifty -5.44% 21.93%
Sensex -6.50% 21.72%
S&P 500 -2.84% 21.47%
CNX Mid-Cap 10.32% 23.62%
* 25 May 2010, Indices bottomed out, when the
current rally started.
BRICS Growth Outperformance
Our out-performance has been increasing
over a period of time
Our Strategy has been to :
Buy during panics/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
Adequate liquidity helps :
Protect against volatility
Provides enough courage and
conviction to buy into panics
Current cash/liquid balances ~ at 15% 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 Cap53%
Mid Cap15%
Small Cap17%
Cash15%
Market Cap Breakup
Banking & Finance23.27%
Branded Garments &
Retail12.81%
Cash15.35%
FMCG14.74%
Infrastructure4.31%
Media5.93%
Oil & Gas23.59%
Sectoral Allocation
Low Portfolio Turnover (Buy & Hold at work)
0.00
0.20
0.40
0.60
0.80
1.00
Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10
Portfolio Turnover
Portfolio Turnover Average turnover
How did we do during periods of Volatility - 10 Biggest falls since October 2009
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.
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%
03-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%
05-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%
01-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%
07-Jun-10 -101.50 -1.98% -336.62 -1.97% -0.99%
04-Feb-10 -86.50 -1.75% -271.10 -1.64% -0.28%*Beta measures the volatility of the
portfolio relative to the index
Against -- Nifty Sensex
Beta * 0.4156 0.4133
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. Some
sectors (like banking, Auto’s) have seen a huge rerating
Overall Valuations are definitely not cheap. If the current sharp momentum continues Valuations
could become a concern as they approach a bubble territory
In some sectors/stocks valuations already factor in fairly aggressive growth rates for FY11
and FY12. Corporate performances could potentially disappoint given high expectations
Price corrections from current high levels could be very sharp, if earnings disappoint
However, markets have also been very discriminative against corporates under-performing
expectations. This is very evident in the current rally since May-end 2010 where broad based
participation is lacking, (the type we have seen in the past, 2006, 2008)
Serious concerns will start when the liquidity driven rally takes even the stocks with bad/doubtful
fundamentals to new high’s
Pockets of opportunities still available in those stocks/sectors where growth is steady and
valuations still leave room for upside.
However we continue to remain cautious of the market levels/individual stocks prices and
valuations and would use sharp rallies as profit booking opportunities
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 time
The sectors that we are bullish are and continue to be over weight:
Banking & Financial Services,
Gas Transportation & Distribution
Domestic Consumption oriented sectors including Paints, Branded Garments, Media etc.
Thank You
Vivek Mavani – Vice President & Senior Portfolio Manager
vivek.mavani@bricssecurities.com
BRICS SECURITIES LIMITED1st 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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