The financial year 2023-24 started on a positive note. April 2023 saw a decisive up move in the markets. The BSE Sensex and the NIFTY 50 showed resilient performance despite the IT sector’s bittersweet Q4 earnings that led to a massive selloff in tech biggies. The key indices saw robust pick up in stock prices that was helped by a strong corporate earnings season, and the Reserve Bank of India pulling the plug on consecutive rate hikes. Foreign portfolio investors (FPIs) made their highest buying of 2023 in April in Indian equities.
Sameeksha PMS gained 5.5% (net of all fees and expenses), and managed to carve an outperformance when compared to the benchmark BSE500TR which gained 4.6%.
It is worth reviewing key aspects of our performance as summarized below:
Three important things must always be kept in mind when looking at performance data. First, for funds such as ours that do not follow model portfolio strategy, the performance of individual clients for different duration is important to look at. Second, some PMSes may be charging fees outside the PMS and hence after fees, performance data may not be comparable to ours. Third, it is important to look at not only portfolio returns but also risk adjusted ratios. We provide data to address all three points later in this note.
Aggregate Fund Performance On A Financial Year Basis
For the first month of the financial year (April 2023 to March 2024), Sameeksha PMS has outperformed the benchmark BSE 500 TRI by generating 5.5% returns against the benchmark BSE500TRI returns of 4.6% (Table 1). Looking at our performance over the financial years, we have outperformed our benchmark in six out of eight financial years (including the current incomplete financial year). Key however is that the sum of outperformance of 52% in those six years far exceeds the sum of underperformance of 10% in the remaining two years.
Looking at our performance over the financial years, we have outperformed our benchmark BSE500 TRI in five out of seven completed financial years. It is important to note that we delivered this alpha despite maintaining a median cash level of 13.3% across the seven financial years. Further, our PMS has delivered a substantial aggregate annual alpha of 41% over BSE500 TRI implying average alpha of 6% (Table 2).
Aggregate Portfolio Returns over various time periods
It is important to note that we have maintained relatively higher levels of cash (13.5% on average over the entire period from inception) from time to time over the duration of managing the portfolio. Notwithstanding the same, from inception as well as over five and three years respectively, we have generated returns of 19.6%, 18.3% and 34.6% beating the benchmark BSE500 TRI returns of 14.4%, 11.4% and 25.5% respectively after fees and expenses. We have delivered strong returns relative to benchmark across various key time periods. (Table 3).
Risk Adjusted Ratios
When compared on a risk-adjusted basis, our PMS shows an even stronger performance with a risk-adjusted alpha generation of 8.2% over the broader market benchmark since its inception. While our portfolio beta has been materially lower than our benchmark, our returns have been higher than the benchmark since inception, implying superior strong risk adjusted returns.
Furthermore, other risk-adjusted returns – Sharpe ratio and Treynor ratio, are also significantly higher than the benchmark indices (Table 4). It is worth noting that we offer superior risk adjusted returns not only compared to the broad BSE500 index heavily weighted towards large cap but also the small cap and mid cap benchmarks as demonstrated by our Sharpe ratio, Alpha, Treynor ratio and Beta.
Aggregate fund performance and ranking on a rolling period basis
Rolling returns are a more useful indicator of consistency in performance versus single period returns. For the rolling three year periods applicable to our entire operating history, Sameeksha PMS has delivered aggregate annualized alpha 96% of the times (47 out of 49 observations) ranging from 0.4% to 23%. For the rolling five year periods applicable, Sameeksha PMS has delivered aggregate annualized alpha 100% of the time (26 out of 26 observations) ranging from 5% to 10% (Table 5).
For the rolling three year periods applicable to our entire operating history, we have been ranked among the multicap universe in the Top Decile 67% of the time (33 out of 49 observations) and in the Top Quartile 92% of the time (44 out of 49 observations). For the remaining 8% observations, we were ranked in the Second Quartile (Tables 6 and 7). For the rolling five year periods applicable for our entire operating history, we have been ranked among the multicap universe in the Top Decile 100% of the time (26 out of 26 observations).
Returns of Individual Portfolios
Because we don’t follow model portfolio strategy, the performance of individual clients is far more important than overall portfolio aggregate returns (Table 8). For investors who are with us for 3 years and more, Sameeksha PMS has returned a very substantial alpha with an average annualized alpha of approx. 9% for the three year period ending 30th April 2023. Similarly, for investors who are with us for 5 years and more, Sameeksha PMS has returned substantial alpha with an average annualized alpha of approx. 7% for the five year period ending 30th April 2023. The table below shows the average annualized returns and alpha over different periods of time of all the clients as on 30th April 2023.
Performance within the PMS Universe
We continue to maintain our top rankings both within the multicap PMS universe as well as the entire PMS universe for key periods of three and five years. The multicap PMS universe rankings are more relevant to us since we follow the multicap strategy.
In the interest of a fair comparison, we present our rankings among those multicap PMSes with AUM more than INR 100 crs. Within this universe, we are 2nd out of 46 PMSes for the five year period and 9th out of 66 PMSes for three year period, highlighting our superior performance over the long term periods (Table 9). Among the multicap universe (considering all AUM), we are consistently ranked in the Top Decile for the five year period for all 26 out of 26 observations reflecting well on the consistency of our performance.
Cumulative Performance versus the benchmark
Sameeksha’s outperformance over its benchmark has continued to widen positively over the years. An investment of Rs. 100 with us since inception (April 2016) would have grown to Rs. 355, far outpacing what one would have earned by investing in a fund that achieved benchmark returns (Figure 1).
Analyzing the sector performance during the month
During the month, indices that showed blockbuster growth this month include Realty, PSU banks, Auto. For Sameeksha PMS, the Healthcare, IT, and Industry Gases & Fuels sectors were outperformers, whereas the benchmark was subdued. However, what hurt us is the lack of exposure towards FMCG and sectors directly related to crude oil where we missed out on participating in the rally. Below is the attribution analysis for the month of April 2023 (Table 10).
Disclaimer – The information contained in this update is provided by our fund accounting platform and is not audited.