February was a volatile month for the Indian stock markets. Wild stock movements with key Adani Group companies hitting their upper and lower circuits throughout the month, kept stock market participants on their heels. In this month, the broader indices BSE500 TRI, BSE Midcap TRI and BSE smallcap plunged -2.75%, -1.76%, -2.94%, respectively. While Sameeksha PMS was also down 1.9% (net of all fees and expenses), we managed to carve an outperformance when compared to the benchmark BSE500TRI.
Among the multicap PMS universe with Asset Under Management (AUM) of more than INR 100 crores tracked by PMS Bazaar, we ranked 3rd out of 49 multicap PMSes for the five year period ending February 2023. For the same period, we are ranked 1st out of 35 multicap PMSes with AUM of more than INR 300 crores. For the three year period ending February 2023, we are ranked 6th out of 68 multicap PMSes reporting to PMS Bazaar. Among the multicap universe (considering all AUM), we are consistently ranked in the Top Decile for the five year period for all 24 out of 24 observations reflecting well on the consistency of our performance.
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.
Sector attribution analysis
During the month, our lack of exposure towards the Power and Gas sectors benefited us. The Logistics & Electricals sectors were outperformers for us, whereas the benchmark was flat. However, what hurt us is the underperformance of the Finance, Aviation, Healthcare, and Insurance sectors where the portfolio struggled compared to the benchmark. Below is the attribution analysis for the month of February 2023 (Table 1).
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 2). For investors who are with us for 3 years and more, Sameeksha PMS has returned a very substantial alpha (outperformance over the benchmark) with a median alpha of approx. 9% for the three year period ending 28th February 2023. Similarly, for investors who are with us for 5 years and more, we have returned substantial alpha with a median alpha of appro. 8% for the five year period ending 28th February 2023. As shown in Table 2, the vast majority of our clients have seen positive alpha over benchmark.
Long term investors, mainly investor accounts older than 5 years and 3 years, have carved out strong alpha, thereby proving Sameeksha PMS to be a valuable partner for their investments (Table 3).
Our NRI clients have also seen strong returns even after factoring in rupee depreciation against US dollars. The portfolio returns are significantly higher than both BSE 500 TRI and S&P 500 TRI, generating strong alpha over both these indices (Table 4)
Aggregate Portfolio Returns
It is important to note that we have maintained relatively higher levels of cash (14% 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 19.2%, 17.2% and 26.0% beating the benchmark BSE500 TRI returns of 13.9%, 10.9% and 17.9% respectively after fees and expenses. Before deducting fees and expenses, we have generated returns of 20.4%, 18.4% and 27.9% for the period from inception (~7 years), five years and three years respectively.
We have delivered strong returns relative to benchmark across various key time periods. (Table 5).
Risk Adjusted Ratios
When compared on a risk-adjusted basis, our PMS shows even stronger performance with a risk-adjusted alpha generation of 9.0% over the broad 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 6). 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.
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. For the three year period, we are ranked 6th out of 68 PMSes. Further, we are ranked 3rd out of 49 PMSes for the five year period comparison within the multicap universe – highlighting our superior performance over the long term periods (Table 7).
Fund Performance on a Financial Year and Calendar Year basis
For the first 11 months of the current financial year ending March 2023 (April 2022 to February 2023), Sameeksha PMS has outperformed the benchmark BSE 500 TRI by generating 4.2% returns against the benchmark BSE500TRI returns of -1.3% (Table 8).
Looking at our performance over the financial years, we have outperformed our benchmark in five out of seven financial years (including the current incomplete financial year). Key however is that the sum of outperformance of 50% in those five years far exceeds the sum of underperformance of 10% in the remaining two years.
For the calendar year 2023 till date, we have positioned ourselves well by outperforming the benchmark BSE500 TRI by 4.5%. However, for the completed calendar year 2022, we have underperformed the benchmark BSE500 TRI by 6.8% (Table 9). This can be mainly attributed to the onset of the Ukraine-Russia war at the start of the calendar year and the ensuing global economic crisis. Nonetheless, we have taken corrective actions since then and we hope to have a good calendar year 2023.
Rolling Returns and Rankings
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, we have been ranked among the multicap universe in the Top Decile 68% of the time (33 out of 47 observations) and in the Top Quartile 91% of the time (43 out of 47 observations). For the remaining 9% observations, we were ranked in the Second Quartile (Tables 10 and 11). 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 (24 out of 24 observations).
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. 335, far outpacing what one would have earned by investing in a fund that achieved benchmark returns (Figure 1).
Disclaimer – The information contained in this update is provided by our fund accounting platform and is not audited.