Underperformance In A Volatile Month

Broader markets remained volatile for the month of January 2022 with a return of -0.4%. Sameeksha PMS underperformed both on an absolute as well as relative basis for the month, generating a return of -2.2%. Volatility has continued in the month of February as well. We will be coming out with a separate note to analyze our short term (last month as well as last six months)  performance.

We continue to rank among the best for the long term performance.  For the three year period ending January 2022, we are ranked 4th out of 90 multicap PMSes reporting to PMS Bazaar. For the five year period as well, we are ranked 4th out of 59 multicap PMSes. Even within the entire PMS universe, we are ranked 7th out of 163 PMSes for the three year period and  7th out of 106 PMSes for the five year period.

As defined by our strategy, we have maintained relatively higher levels of cash (14.2% on average over the entire period from inception) from time to time over the duration of managing the portfolio. Notwithstanding that, from inception as well as over five and three years respectively, we have  generated returns of 23.3%, 23.9% and 38.4% versus the benchmark BSE500 TRI returns of 17.0%, 16.7% and 19.9%. Most importantly, clients investing with us across extended time periods have enjoyed meaningful alpha irrespective of the time of their entry.  We do take note of the underperformance of portfolios of clients who have been with us for six months or less and will discuss that separately.

Portfolio Returns

For the month of January 2022, broader markets had a down month with BSE 500 TRI generating a return of -0.4%. We had a down month as well with a return of -2.2%. While our returns are significant for longer periods, we are not happy with our performance over the last six months. We understand that our investors look to us to deliver higher positive absolute returns. We will continue to work hard towards that goal.  

For longer periods where the outperformance is much more meaningful, we have strongly outperformed our benchmark index across all the relevant key periods – as can be observed in Table 1.

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, especially for longer periods. The multicap PMS universe rankings are more relevant to us since we follow multicap strategy.

Although our performance has been consistently superior relative to our benchmark, we acknowledge our under performance relative to small and mid cap indices in the recent months – which has led to our fall in rankings for 1 year performance.

For the three year period, we are ranked number 4 out of 90 PMSes. In the same vein, we are ranked 4th out of 59 funds for the five year period comparison within the Multicap universe – highlighting our superior performance over the long term

When compared with the entire PMS universe,we again come out on top ranking for longer key periods. We are ranked 7th out of 163 PMSes for the three year period and 7th out of 106 PMSes for the five year period.

Comparison Of Rolling Returns With Other Funds

Rolling returns are a more useful indicator of consistency in performance versus single period returns. For the three year period ending January 2022, we have meaningfully outperformed all the major relevant mutual fund categories that we are comparable with and have maintained our top decile ranking across both our comparable universe of Multicap PMSes as well as across the entire PMS universe (Table 4). Furthermore, we have been consistently ranked among the top 5% for the last one year.

Our rolling one-year returns have been slightly lower due to our underperformance in the recent months. However, we still have maintained our rankings in the upper half of the table across the PMS universe consistently over the last two years (Table 5).

Performance Of Individual Portfolios

Irrespective of their investment timings, the portfolio returns of our clients continue to outpace the benchmarks by a significant margin (Table 6). Portfolio returns for clients who have been with us for longer periods have seen remarkably strong alpha. For a long term investor, Sameeksha PMS has proven to be a valuable partner for their investments.

Similarly, our NRI clients have seen strong returns even after factoring in rupee depreciation against US dollars. The portfolio returns are significantly higher than both BSE 500 TR and S&P 500 TRI, generating strong alpha over both these indices.

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. 340, far outpacing what one would have earned by investing in a fund that achieved benchmark returns (Figure 1). 

Fund Performance On A Financial Year Basis 

Sameeksha PMS generated a return of 30.3% in ten months (April 2020 – January 2022) of the current financial year ending March 2022, outperforming its benchmark index BSE500 TRI – which returned 22.1% over the same period (Table 8). Discerning investors would notice that we have delivered this performance despite maintaining a meaningful percentage of our portfolio in cash from time to time and that is well reflected in our risk-adjusted-performance outcomes. 

Looking at our performance over the financial years, it is evident that we have clearly out-performed our benchmark in four out of six financial years (including the current incomplete year).  Key however is that the sum of outperformance in those four years far exceeds the sum of underperformance in the remaining two years. Also important is that after adjusting for cash exposure, we underperformed the benchmark only in one out of six years. 

The performance pattern on a calendar year basis has been quite similar. (Table 9) For the just completed calendar year ending 2021, we have generated a return of 48.3% with an alpha of 16.7% over our benchmark BSE 500 TRI. For the new calendar year 2022, we have started with a negative return, but we are hopeful of changing tides and are consciously working towards that goal.

Risk Adjusted Ratios

When compared on a risk-adjusted basis (Table 10), our PMS shows even stronger performance with a risk-adjusted alpha generation of 12.3% over the broad market benchmark since its inception.

Furthermore, other risk-adjusted returns – Sharpe ratio and Treynor ratio, are also significantly higher than the benchmark indices (Table 10). It is worth noting that we offer superior risk adjusted returns not only compared to the broad BSE 500 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.

Please let us know if you have any questions. 

Disclaimer : The Information Contained In This Update Is Based On Data Provided By Our Fund Accounting Platform And Is Not Audited.

Among The Most Successful Professionals In Equities; Rated The #1 Technology Sector Analyst In Institutional Investors Polls For A Decade. Highly Respected Among Peers For His Path-Breaking Work And Thought Leadership. Rose From An Associate To Managing Director Within A Span Of Six Years In The Investment Banking Industry

Twenty Years Of Experience Building Top Research Franchises: Seven Years As Managing Director And The Global Head Of Technology At JP Morgan, Six Years As Director And Head Of Asia Pacific Technology At Credit Suisse And Five Years As Founder Of Equirus SecuritiesTrack Record Of Innovation And Excellence In Equity Research

Anchored The Rise Of Credit Suisse  From An Unknown Name In Asian Equities To A Number One Ranked Firm In Asian Equities; Head Of Asia Pacific Tech Research

Credited For Building Top Ranked Global As Well As Asian Tech Research Practice At JP Morgan As MD And Global Head Of Tech Research; Made Defining Contribution To Enable JPMorgan To Move From An Also-Ran Player To A Top Global Name In Equity Research

Built A Very Profitable And Award Winning Indian Equity Business At Equirus From Scratch On A Tiny Budget; Achieved Number Two Ranking In Asia For Idea Performance

Impeccable Track Record Of Identifying True Long Term Winners Ahead Of Others Including Samsung Electronics, TSMC, Infosys And TCS And Guiding Investors To Stay Clear Of Laggards Such As UMC And SMIC Years Ahead Of Consensus.

Mind Of An Engineer, Worked In A Team That Designed The World’s Fastest Microprocessor With A Manta “Paranoia Is The Safest Frame Of Mind”. Awarded Two US Patents.

Work Experience Of Designing The World’s Fastest Microprocessors Based On Cutting Edge Technology For Which He Jointly Holds Two US Patents

Best In Class Business Education From The World Renowned Business School: Double Major In Economics And Finance, Beta Gamma Sigma Cum Laude From The University Of Chicago Booth. Excelled In Studies Under World Renowned Faculty Such As Dr. Raghuram Rajan, Former Governor Of The Reserve Bank Of India