BRICS PMS Performance Update - 16 August 2010

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Performance Update of the Portfolio Management Services (PMS) I manage at BRICS Securities

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BRICS PMS Performance Update - 16 August 2010

  1. 1. MULTIPLE -STRATEGY TREND RATED AUTOMATIC TRADING SYSTEM Portfolio Management Services (PMS) Performance Update 16 August, 2010 Vivek Mavani – Vice President and Senior Portfolio Manager
  2. 2. 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.
  3. 3. Absolute Performance – 16 August, 2010 YTD Since Weekly Monthly Quarterly Half Yearly (Calendar) Inception BRICS Growth 3.28% 7.60% 18.11% 30.78% 30.41% 41.50% NIFTY -1.24% 0.45% 6.38% 11.59% 4.18% 6.59% SENSEX -1.29% -0.44% 9.76% 10.83% 3.36% 5.34% S&P CNX 500 -0.55% 0.69% 11.04% 11.36% 5.21% 10.57% S&P CNX MIDCAP 0.71% 3.48% 14.96% 22.32% 17.27% 30.13% Inception Date: 1 October, 2009 Portfolio returns are net of fees & expenses
  4. 4. Performance Snapshot 32% 27% 22% 17% 12% 7% 2% -3% Monthly Quarterly Half Yearly YTD (Calender) Since Inception BRICS Growth NAV Nifty Sensex S&P CNX 500 CNX Mid Cap Inception Date: 1 October, 2009 Portfolio returns are net of fees & expenses
  5. 5. Consistency in our Month-on-Month Performance Month Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 July-10 Aug-10 BRICS Growth -0.67% 2.79% 6.27% -1.84% 0.75% 6.24% 3.77% 1.86% 5.81% 3.84% 6.87% NIFTY -7.31% 6.81% 3.35% -6.13% 0.82% 6.64% 0.55% -3.63% 4.45% 1.04% 0.94% SENSEX -7.23% 6.48% 3.18% -6.34% 0.44% 6.68% 0.18% -3.50% 3.83% 1.56% 1.02% S&P CNX 500 -6.46% 7.59% 4.43% -4.00% -0.69% 4.50% 1.27% -3.24% 4.59% 1.23% 1.77% CNX MID-CAP -1.77% 8.65% 3.97% -3.11% -0.48% 7.50% 4.62% -3.79% 4.83% 3.50% 3.58%
  6. 6. Month-on-Month Comparison 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 BRICS Growth Nifty Sensex S&P CNX 500 CNX Mid Cap
  7. 7. Compared to Top 20 Mutual Funds Ranked on 1 month returns Performance Rank Scheme Name 1 Mth % 3 Mths % 6 Mths % 1 Brics Growth 7.60 18.11 30.78 2 IDFC Premier Equity Fund - Plan A - Growth 6.75 15.67 25.75 3 Canara Robeco Emerging Equities - Growth 4.50 16.03 27.15 4 Escorts Growth Plan - Growth 4.20 7.76 22.76 5 HDFC Equity Fund - Growth 4.19 12.93 22.36 6 Franklin India Opportunity Fund - Growth 3.98 9.69 14.87 7 Fortis Future Leaders Fund - Growth 3.93 13.18 24.37 8 SBI Magnum Global Fund 94 - Growth 3.71 12.82 18.64 9 Kotak Emerging Equity Scheme - Growth 3.57 13.58 22.03 10 DSP BlackRock Equity Fund - Growth 3.48 9.90 18.26 11 Reliance Equity Opportunities Fund - Growth 3.43 13.18 25.93 12 Tata Select Equity Fund - Appr 3.15 7.52 13.06 13 Morgan Stanley A.C.E Fund - Growth 3.06 9.72 17.14 14 HDFC Long Term Equity Fund - Growth 2.95 12.06 19.17 15 Quantum Long-Term Equity Fund - Growth 2.83 10.22 19.49 16 Franklin India High Growth Companies Fund - Growth 2.82 9.71 13.88 17 Franklin India Prima Fund - Growth 2.65 11.55 17.98 18 DSP BlackRock India Tiger Fund - Growth 2.58 9.42 15.75 19 DSP BlackRock Opportunities Fund - Growth 2.57 10.6 19.68 20 Religare Growth Fund - Growth 2.55 9.08 15.33 The comparison includes 250 Diversified Equity Funds across all Fund Houses
  8. 8. Compared to Top 20 Mutual Funds Ranked on 3 month returns Performance Rank Scheme Name 1 Mth % 3 Mths % 6 Mths % 1 Brics Growth 7.60 18.11 30.78 2 Canara Robeco Emerging Equities - Growth 4.50 16.03 27.15 3 IDFC Premier Equity Fund - Plan A - Growth 6.75 15.67 25.75 4 Kotak Emerging Equity Scheme - Growth 3.57 13.58 22.03 5 Fortis Future Leaders Fund - Growth 3.93 13.18 24.37 6 Reliance Equity Opportunities Fund - Growth 3.43 13.18 25.93 7 HDFC Equity Fund - Growth 4.19 12.93 22.36 8 SBI Magnum Global Fund 94 - Growth 3.71 12.82 18.64 9 HDFC Long Term Equity Fund - Growth 2.95 12.06 19.17 10 Franklin India Prima Fund - Growth 2.65 11.55 17.98 11 HDFC Growth Fund - Growth 2.32 11.30 19.17 12 Fidelity Equity Fund - Growth 1.93 10.75 20.59 13 DSP BlackRock Opportunities Fund - Growth 2.57 10.6 19.68 14 JPMorgan India Equity Fund - Growth 2.19 10.38 18.68 15 Quantum Long-Term Equity Fund - Growth 2.83 10.22 19.49 16 DSP BlackRock Equity Fund - Growth 3.48 9.90 18.26 17 Morgan Stanley A.C.E Fund - Growth 3.06 9.72 17.14 18 Franklin India High Growth Companies Fund - Growth 2.82 9.71 13.88 19 Franklin India Opportunity Fund - Growth 3.98 9.69 14.87 20 Fidelity India Growth Fund - Growth 1.45 9.65 18.78 The comparison includes 250 Diversified Equity Funds across all Fund Houses
  9. 9. Compared to Top 20 Mutual Funds Ranked on 6 month returns Performance Rank Scheme Name 1 Mth % 3 Mths % 6 Mths % 1 Brics Growth 7.60 18.11 30.78 2 Canara Robeco Emerging Equities - Growth 4.50 16.03 27.15 3 Reliance Equity Opportunities Fund - Growth 3.43 13.18 25.93 4 IDFC Premier Equity Fund - Plan A - Growth 6.75 15.67 25.75 5 Fortis Future Leaders Fund - Growth 3.93 13.18 24.37 6 Escorts Growth Plan - Growth 4.20 7.76 22.76 7 HDFC Equity Fund - Growth 4.19 12.93 22.36 8 Kotak Emerging Equity Scheme - Growth 3.57 13.58 22.03 9 Fidelity Equity Fund - Growth 1.93 10.75 20.59 10 DSP BlackRock Opportunities Fund - Growth 2.57 10.60 19.68 11 Quantum Long-Term Equity Fund - Growth 2.83 10.22 19.49 12 ICICI Prudential Fusion Fund - IP - Growth 2.02 9.59 19.37 13 HDFC Growth Fund - Growth 2.32 11.30 19.17 14 HDFC Long Term Equity Fund - Growth 2.95 12.06 19.17 15 Fidelity India Growth Fund - Growth 1.45 9.65 18.78 16 JPMorgan India Equity Fund - Growth 2.19 10.38 18.68 17 SBI Magnum Global Fund 94 - Growth 3.71 12.82 18.64 18 DSP BlackRock Equity Fund - Growth 3.48 9.90 18.26 19 ICICI Prudential Discovery Fund - Growth 1.66 7.70 18.11 20 Franklin India Prima Fund - Growth 2.65 11.55 17.98 The comparison includes 250 Diversified Equity Funds across all Fund Houses
  10. 10. BRICS Growth NAV Trend  Indices have been range bound in the BRICS Growth NAV v/s Indices (normalised) last nine months, with interim periods of 150 volatility 145  Yet BRICS Growth has delivered steady 140 & consistent returns in line with our 135 objective 130  Performance has been a result of our 125 Stock Picking 120  Leading to consistency in our 115 performance as well as increasing out- 110 performance of our returns compared to 105 the benchmark indices 100 95 90 85 1-Nov-09 1-Apr-10 1-May-10 1-Jul-10 1-Aug-10 1-Feb-10 1-Dec-09 1-Jan-10 1-Mar-10 1-Jun-10 1-Oct-09 BRICS Growth Nifty Sensex S&P 500 CNX Midcap
  11. 11. BRICS Growth Outperformance  Our out-performance has been BRICS Growth NAV Outperformance vis-a-vis Indices increasing over a period of time 40% 35%  Our Strategy has been to : 30%  Buying during panics  Book partial profits during sharp 25% rallies 20%  Remain liquid in the interim 15%  Large liquidity helps :  Protect against volatility 10%  Provides enough courage and 5% conviction to buy into panics 0%  Current cash/liquid balances ~ at 18% of the Portfolio -5% -10% 1-Apr-2010 1-May-2010 1-Aug-2010 1-Nov-2009 1-Feb-2010 1-Jul-2010 1-Dec-2009 1-Jan-2010 1-Mar-2010 1-Jun-2010 1-Oct-2009 Nifty Sensex S&P 500 CNX MidCap
  12. 12. Portfolio Breakup Sectoral Allocation Market Cap Branded Garments & Cash 18% Cash 18% Retail 21% Large Cap 34% Construction 6% Banking & Media 6% Small Cap Finance 14% 19% Consumer Oil & Gas Goods 13% Mid Cap 22% 29% Large Cap. More than Rs 5,000 crores Mid-Cap Rs 1,000 - 5,000 crores Small Cap. Less than Rs 1,000 crores
  13. 13. Low Portfolio Turnover (Buy & Hold at work) Portfolio Turnover 1.00 0.90 0.80 0.70 0.60 times 0.50 0.40 0.30 0.20 0.10 0.00 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Portfolio Turnover
  14. 14. 10 Biggest falls since October 2009  How much a portfolio falls during a Points Points % Fall - correction / sharp downturn is as % Fall - % Fall - Date Fall - Fall - BRICS important as how much it gains in a bull Nifty Sensex market Nifty Sensex Growth  Protecting capital is often more important 27-Jan-10 -159.65 -3.19% -490.64 -2.92% -2.29% during periods of volatility 03-Nov-09 -147.80 -3.14% -491.34 -3.09% -0.36%  Downside protection equally contributes to superior returns over a period of time 19-May-10 -146.55 -2.89% -467.27 -2.77% -0.84%  We have managed to fall less than the 25-May-10 -137.20 -2.78% -447.07 -2.71% -1.62% indices during each of the sharp falls / panics since our inception 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% Against -- Nifty Sensex 26-Nov-09 -102.60 -2.01% -344.02 -2.00% -0.95% Beta * 0.4023 0.3995 07-Jun-10 -101.50 -1.98% -336.62 -1.97% -0.99% *Beta measures the volatility of the portfolio relative to the index 04-Feb-10 -86.50 -1.75% -271.10 -1.64% -0.28%
  15. 15. 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 on a daily basis  Rest of 2010, Markets are likely to remain range bound with negative bias and sharp interim volatility  Markets have been very discriminating against corporates under-performing expectations. As a result valuations/multiples could de-rate over a period of time. These stocks may not bounce back for a while even if the overall markets do  Corporates that have delivered/exceeded expectations have witnessed re-rating of multiples and have seen sharp bounce backs after each panic/fall  Overall Valuations are reasonable, but definitely not cheap  In some sectors/stocks valuations already factor in fairly aggressive growth rates for FY11 and FY12. Corporate performances could disappoint in those cases given high expectations  Q1 FY2011 results have just about met the expectations. In fact most sectors under- performed the expectations on profit margin front.  Pockets of opportunities still available in those stocks where growth v/s valuations are still favourable
  16. 16. 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  Even in range bound markets there are enough stocks providing consistent and absolute returns. Stock picking therefore is the key  Our strategy going ahead would continue to be:  Buy on declines/panics  Use the sharp rallies for part profit booking  Hold large cash/liquidity during interim periods  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.
  17. 17. Happy Investing Thank You Vivek Mavani – 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.

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