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Time of India
29-05-2025
- Business
- Time of India
ETMarkets PMS Talk: PIPE and Value strategies delivered 30–37% CAGR over 5 years - Anand Shah reveals growth drivers
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Despite the evolving market landscape and bouts of volatility, disciplined investing continues to deliver. In this edition of ETMarkets PMS Talk, we speak with Anand Shah, Chief Investment Officer – PMS & AIF at ICICI Prudential AMC, whose PIPE and Value strategies have clocked an impressive 30–37% CAGR over the last five an exclusive conversation, Shah breaks down the core investment philosophies, highlights key growth drivers, and explains how bottom-up stock selection, valuation discipline, and a long-term mindset have been pivotal in delivering alpha and building investor trust. Edited Excerpts –A) The recent volatility in Indian equity markets is largely driven by a combination of global macro uncertainties and geopolitical it is important to view this in the context of a market that has delivered strong returns over the past few years with relatively fewer degree of consolidation was expected and, arguably, healthy. From a medium- to long-term perspective, we continue to be economic fundamentals remain strong, driven by robust domestic consumption , infrastructure push, and digital believe volatile times offer opportunities for long-term investors to build positions in fundamentally strong businesses at more reasonable valuations.A) The March 2025 quarter has offered a mixed earnings picture. On the positive side, sectors such as banking, capital goods, and consumer services have shown resilience, supported by improving credit growth, operational efficiencies, and healthy balance there have been disappointments too, particularly in pockets of the export and discretionary consumption space, where demand has been more are seeing more divergence in earnings this quarter. This underscores the need for selective, bottom-up investing and a stronger focus on valuation discipline in this environment.A) We remain structurally bullish on Indian equities. Despite near-term global headwinds, India offers a compelling long-term growth story supported by favorable demographics, formalization of the economy, digital adoption, and a strong investment cycle led by both public and private current valuations in some segments, especially in mid and small caps, are elevated compared to historical a diversified portfolio and a disciplined investment approach, will be key to navigating this cycle and generating sustainable wealth.A) We see strong earnings potential in capex-linked sectors over the next few years. Infrastructure, financials, and consumer services are particularly especially large banks, are set to benefit from economic expansion and improving credit demand. Consumer services are seeing tailwinds from rising disposable incomes and evolving consumption infrastructure continues to be a structural theme backed by government push and rising corporate these are not defensive in the traditional sense, their long-term fundamentals and policy support make them relatively more predictable in an otherwise uncertain environment.A) We have had an extended bull run since the pandemic, with very limited drawdowns until recently. A phase of moderation was should recalibrate their return expectations and focus on the fundamentals i.e. proper asset allocation, portfolio diversification, and staying invested through is inherent to equities, but it also presents opportunities.A) The PMS industry is evolving rapidly, driven by the growing need for bespoke investment solutions, rising HNI wealth, and greater awareness of differentiated strategies beyond traditional mutual investors seek alpha in an increasingly mature market, demand for disciplined, transparent, and well-researched portfolio strategies is is also enabling better portfolio access and reporting, while regulation is enhancing credibility with regards to differentiated offerings. All these factors are expected to propel the PMS industry forward meaningfully.A) At ICICI Prudential AMC, the PMS vertical operates like a boutique within an institution—offering niche, research-intensive strategies under the umbrella of institutional one of the top players in the Equity PMS Discretionary segment is a result of our consistent investment philosophy and the trust of our core investment approach is built around the BMV (Business, Management, Valuation) framework. We focus on quality businesses with capable managements and invest at reasonable valuations.A robust research team supports bottom-up stock selection, while our independent risk team ensures portfolio quality and process-driven approach, combined with a long-term wealth creation mindset, has helped us deliver superior outcomes for our investors, which in turn aids the growth of the PMS Prudential PMS' PIPE Strategy has delivered nearly 37% annualised returns over the past five years, while the Value Strategy has also compounded at around 30% CAGR.A) Over the past five years, both our PIPE and Value Strategies have delivered strong performance. This outperformance is rooted in our disciplined, bottom-up investment approach and a sharp focus on intrinsic PIPE Strategy has benefited from the broader re-rating in the mid- and small-cap segments. Our focus has been on identifying emerging leaders with strong economic moats, robust balance sheets, and credible management look for companies at inflection points where capital infusion can act as a catalyst for growth. Valuation comfort remains a non-negotiable criterion in our stock selection our Value Strategy is centered on investing in fundamentally strong businesses trading at a discount to their intrinsic prioritize companies with sustainable earnings profiles, sound capital allocation, and the potential for long-term these are businesses operating in cyclical or contrarian sectors, where patient capital can benefit from mean reversion and structural both these strategies, our commitment to rigorous research has allowed us to consistently identify and invest in resilient businesses with long-term wealth creation potential.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
23-05-2025
- Business
- Time of India
ETMarkets PMS Talk: India's growth + global devaluation = next bull market - Qode's FY26 outlook
India's structural growth story combined with the looming threat of global currency devaluation could be the perfect recipe for the next big bull run in equities, says Rishabh Nahar, Partner and Fund Manager at Qode Advisors, in this edition of ETMarkets PMS Talk. In an exclusive interaction, Nahar shares how Qode's quant-driven strategies helped their Tactical and All Weather Funds outperform the BSE 500 TRI in April. With a strong emphasis on risk management , data-backed decision-making, and selective risk-taking, Qode's approach focuses on consistent outperformance, particularly during volatile or bearish phases. Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. From managing downside through gold and puts, to identifying high-conviction growth stocks, Nahar explains why volatility isn't risk—and why India is uniquely positioned for long-term equity market gains as global macro headwinds continue to shift. Edited Excerpts – Q) Thanks for taking the time out. Qode's Tactical Fund and All Weather Fund outperformed the BSE 500 TRI in April — what were the key drivers of this strong performance? by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like An engineer reveals: 1 simple trick to get all TV channels Techno Mag Learn More Undo A) We specialise in risk management, and that played out well for us. We protect the portfolios with an element of gold as well as protection using puts. We were rewarded because of having these positions and exposure. The Qode All weather and Tactical portfolios are pure quant portfolios designed to outperform during bear markets. We have a strong risk management framework in place. Since last year, markets (especially mid- and small-caps) have been elevated, and we were in a risk-off mode. Only in the last few months have we taken some risk on these portfolios. All these decisions are not made subjectively. We have a pure data-driven approach and have done extensive testing with a deep understanding of markets. Live Events Q) What changes or tactical adjustments were made during April that contributed to portfolio resilience? A) Our portfolios are designed to weather bad months or large amounts of volatility. The Qode All Weather, as the name suggests, is designed to see lower drawdowns and outperform during bad times. We did not make any tactical changes, since we are a quant fund our models are designed taking years of data that have seen situations like this in the past. Q) With relatively low beta across the board, how does Qode manage downside risk while still seeking meaningful returns? A) With all weather and tactical, we try to maintain a low beta, but when markets are beaten down and businesses are available at attractive valuations, we are willing to take on risk. We are not afraid to take risk- when the situation is favourable. Our outperformance will come by protecting downside in bad years. To explain this, here is a simple example: Agencies The above table easily shows how drawdowns could affect your returns. Q) Qode Growth and Future Horizons have slightly higher standard deviations — is this due to increased sectoral concentration or style tilt? A) With Qode Growth Fund and Qode Future Horizons, we are looking at buying businesses that are showing strong earnings momentum. In the Growth Fund, we hold a 30-stock portfolio with an average market cap of 8000 crores. These are fairly strong businesses that have shown great execution capabilities in the past. But due to the size of the businesses being smaller, the stock price sees more volatility. With Future Horizon, we are looking to hold 10-12 fundamentally strong businesses with immense growth potential. This is a more concentrated portfolio because we have a lot of conviction in our picks. We understand the business in depth and take a large position in each of them. Because of the larger position sizes, the volatility is higher, but we do not consider volatility as risk. Q) How do you pick stocks? A) Qode Growth Fund, Qode All Weather and Qode Tactical are pure quant funds. Businesses and ETFs are picked based on factors that we think lead to EPS growth. There are three pillars we work around: 1. What to buy (fundamentally strong businesses) 2. When to buy (Valuations) and 3. How much to buy (position sizing) All our quant models are built around this framework. All three strategies are built with a data-driven approach. Our fourth strategy, Qode Future Horizon – we are looking at a quantamental framework because there are lots of great businesses with scattered data or data that's not structured. We look to meet the management and understand the business by taking a deep dive individually in each business. Q) The April edition highlights 'Steady in the storm, stronger in the sunrise' — how does this reflect your macro view heading into FY26? A) Our macro view remains fixed at the growth story for India and Equity markets. With the US debt crisis coming closer, a large amount of US debt is maturing in the next four years. Money printing and devaluation will be a large factor for equities to do well. So, money printing/devaluation plus a strong position for India will fuel the next bull market . Having exposure to assets like equities/gold and real estate (mostly land) will be a key component for individuals to maintain/grow their wealth. Q) What is your outlook for equity markets in Q1 FY26, and how are you positioning your portfolios in response? A) We refrain from having such a short-term outlook because markets are a complex place, and in the short run, factors like demand/supply, war, and trade policies will have a larger impact on their movement. Even if we could model all these factors there is no significant upside for anyone to have a view on the markets for a quarter or two. Q) Are there any sectors or themes you are overweight or underweight in currently, and why? A) We are sector/ theme agnostic. We look for fundamentally strong businesses that have a long runway for earnings growth and promoters that have excellent execution capabilities. We like to own owner-operated businesses with strong brand names and high ROCE's. Most of the businesses we own are completely debt-free and have had a strong earnings momentum.
Economic Times
17-05-2025
- Business
- Economic Times
ETMarkets PMS Talk: April's 9.9% spike - Nikhil Johri on what drove Trivantage Capital's outperformance
Trivantage Capital's portfolio showed impressive gains. Nikhil Johri credits the returns to policy and sectoral factors. RBI's accommodative stance and stable asset quality helped. The fund focuses on governance and due diligence. It targets opportunities in asset management and affordable housing. Johri sees a rebound in small and mid-cap financials. He believes India's financial sector offers long-term value. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Q) Thanks for taking the time out. With a 9.9% monthly return in April 2025, what were the key contributors to the recent performance spike? Q) Your portfolio has outperformed the benchmark over 2 years but slightly lags since inception. What market conditions do you believe will help narrow or reverse this gap? Tired of too many ads? Remove Ads Q) What inspired the creation of a pure-play financial services portfolio focused exclusively on small and mid-cap companies? Q) How do you ensure that governance and management quality remain high across the small and mid-cap financial names in your portfolio? Q) With nearly equal allocation to small (48%) and mid-cap (48%) financials, what is the rationale behind this balanced mix? Q) How do you identify winners across diverse sub sectors like home finance, asset management, small finance banks, and insurance within financial services? Q) Given the evolving regulatory and interest rate landscape, what are the biggest risks and opportunities you foresee in the financial sector? Q) What is your take on the markets amid rising trade war and rising geopolitical tensions between India & Pakistan? Q) Which sectors are you currently overweight and underweight in? In April 2025, Trivantage Capital 's pure-play small and mid-cap financial services portfolio delivered an impressive 9.9% monthly return, significantly outperforming its sparked this sharp surge? In this edition of ETMarkets PMS Talk , we sit down with Nikhil Johri , Founder & Chief Investment Officer at Trivantage Capital, to unpack the drivers behind the portfolio's stellar performance, the strategic rationale for staying focused on SMID financials, and why he believes this rebound is just getting started. Johri attributes the outperformance to a combination of supportive macro tailwinds, including the RBI's shift to an accommodative monetary stance and resilient asset quality in the secured lending beyond the headlines, his investment philosophy is deeply rooted in rigorous due diligence, governance-driven stock selection, and sub-sector specialization across areas like asset management, affordable housing, and small finance this candid conversation, Johri explains how his team navigates the evolving market landscape, the rationale behind the nearly equal allocation to small and midcaps, and why smart investors shouldn't ignore the compelling opportunities unfolding within India's underpenetrated financial services sector. Edited Excerpts –A) The strong performance was driven by a supportive policy environment and sectoral resilience. RBI's shift to an accommodative monetary policy stance in April, along with abundant system liquidity, kept funding costs low—particularly benefiting small and midcap banks and asset quality among small lenders in the secured lending segment remained remarkably resilient, allowing them to stay insulated from the travails of the microfinance combination of favourable funding environment and stable credit quality was central to the portfolio's strong performance. Overall, the portfolio was well-positioned to capture these tailwinds as they primary reason for this performance gap has been the sharp underperformance of small and midcap stocks relative to large caps in the current calendar of April 30, 2025, the BSE 400 MidSmallCap Index was down 8.9% and the BSE 250 SmallCap index had declined 13.0%, while the Nifty 50 TRI was up 3.2%.This correction was driven by a combination of external shocks—primarily the imposition of tariffs and geopolitical tensions in the region. However, with both these concerns now abating, we are already seeing a sharp rebound in the SMID (Small and Midcap) believe this recovery is still in its early stages and will gather further strength as macro stability returns and domestic demand remains portfolio is well-positioned to benefit from this mean reversion, and we remain confident that this will help bridge—and potentially reverse—the performance gap over the coming the same time, this presents a compelling opportunity for smart investors to selectively participate in the resurgence of quality small and midcap names within the financial sector, where earnings visibility and balance sheet strength continue to stand creation of a pure-play financial services portfolio focused on small and mid-cap companies was driven by a combination of attractive valuations and structural opportunities that emerged post the of December 31, 2022, financial services indices had notably underperformed the broader markets over a three-year period—while the Nifty 500 TRI delivered 61.7% returns and the Nifty 50 TRI 54.2%, the Nifty Bank TRI and Nifty Financial Services TRI lagged significantly at 35.2% and 32.5%, divergence highlighted a compelling value opportunity, particularly within the small and mid-cap financial space, where many businesses were undervalued despite strong there was a significant influx of global private equity capital into SMID financial services companies, leading to improved management quality and governance frameworks through professionalized leadership and revamped is also important to note that several high-potential sub-sectors within financial services—such as Asset & Wealth Management , Brokerages, Rating Agencies, Stock & Commodity Exchanges, and Affordable Housing—are predominantly represented only in the small and mid-cap made a focused investment approach not just timely but necessary to fully capture the breadth of these these factors, we launched this dedicated investment approach on March 1, 2023, with the conviction that this segment offers meaningful long-term value creation potential for discerning the financial metrics and business fundamentals, we place significant emphasis on governance standards and management quality when evaluating investments in the small and mid-cap financial due diligence process is rigorous and multi-layered. We carefully assess the composition of the Board of Directors and the credibility of the auditors, review the management's track record, analyse credit ratings, and consider the presence of reputed private equity investors, which often serves as a strong external addition, we actively engage with the broader ecosystem—including industry peers, market participants, and occasionally even competitors—to gather independent views on the management's integrity and execution holistic approach ensures we remain aligned with high governance standards and back businesses with sustainable leadership portfolio construction process plays a critical role in delivering strong, risk-adjusted performance. As part of this process, we consciously ensure diversification across various subsectors within the financial services space to mitigate concentration investment framework also factors in specific risks associated with small and mid-cap names—such as illiquidity, higher volatility, and sub-optimal scale of these dynamics, portfolio construction becomes an ongoing act of optimization rather than strict adherence to any pre-defined do not set out to deliberately maintain an equal weight between small and mid-caps; instead, allocations generally range between 40% and 60% each, depending on prevailing market conditions and our current balanced mix reflects where we see the best risk-reward opportunities at this stage of the market potential winners across the diverse sub-sectors of financial services requires deep domain expertise and a highly customized evaluation sub-sector—be it home finance, asset management, small finance banks, or insurance—operates with distinct business models, regulatory environments, and growth investment process is designed to recognize and account for these nuances. We apply a rigorous analytical approach that assigns appropriate weightages to key operating metrics specific to each sub-sector—whether it's AUM growth and fee income for asset managers, underwriting quality and claims ratios for insurers, or NIMs and asset quality for disciplined, metric-driven evaluation ensures we consistently identify businesses with sustainable competitive advantages, prudent risk management, and strong governance—hallmarks of long-term value creators across the financial services financial sector's evolving regulatory and interest rate landscape presents both challenges and opportunities. While it is a highly regulated space—which, in our view, offers significant comfort to minority investors by ensuring better governance and systemic stability—it can also create periodic include liquidity and interest rate risks, regulatory pricing caps leading to margin pressures that businesses must carefully said, the opportunity set for small and mid-sized financial services companies in India remains exceptionally factors like low financial penetration, a growing middle class, and robust consumer demand create a fertile environment for well-managed SMID businesses to thrive despite cyclical challenges. For investors with a disciplined, long-term approach, this represents a compelling growth geopolitical tensions and trade-related uncertainties do create short-term volatility, we believe markets are increasingly resilient to such external fact, as things stand today, the macro headwinds have meaningfully eased, triggering a sharp rebound in global focus remains firmly on bottom-up stock selection, particularly in domestic economy-facing businesses that are well-positioned to benefit from India's long-term structural growth of external noise, we see strong and sustained opportunities for value creation in this space for years to financial services sector offers a well-diversified investment universe, and our portfolio reflects this breadth through a balanced exposure across several high-conviction the top sub-sectors in the portfolio comprise Wealth Management, Asset Management, Affordable Housing, Stock and Commodity Exchanges and other Capital Market segments offer a compelling combination of strong growth visibility, structural under-penetration, and attractive profitability active portfolio management ensures that we stay aligned with emerging opportunities while prudently managing risk.: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
14-05-2025
- Business
- Time of India
Auto Components, Textiles, REITs: Where green portfolio sees dividend-driven value, says Sreeram Ramdas
With that being said, where the investment opportunities are scarce, we sit on cash. In fact during September 2024, we were sitting on 54% cash as the valuations were stretched and mostly uninvestable. Green Portfolio's Dividend Yield Fund achieved a 17.3% net return in FY25, driven by diesel engine manufacturers and REIT investments, despite tariff tensions. The fund strategically avoids PSUs, focusing on private companies with high growth potential in the small and mid-cap space. Looking ahead to FY26, the fund is optimistic about manufacturing-led growth, particularly in auto components, chemicals, and textiles. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Despite a volatile global backdrop and heightened tariff tensions, Green Portfolio 's Dividend Yield Fund delivered a resilient 17.3% net return in this edition of ETMarkets PMS Talk, Sreeram Ramdas , Vice President at Green Portfolio, breaks down what powered the fund's performance—from a standout diesel engine manufacturer to a strategic allocation in Embassy also explains why the fund avoids PSUs, maintains a long-term lens for value discovery, and sits on cash when valuations run a distinct strategy blending dividend income and capital appreciation, the fund is now betting big on manufacturing-led growth in FY26. Edited Excerpts –A) We did tremendously well last year. In the first 9 months of FY25, the portfolio net returns were precisely 25%.Post that, thanks to the tariff war and a sea of uncertainty, our returns diminished in all, we closed FY25 at 17.3% net returns after fees. These performance numbers only account for the capital appreciation and don't include the dividend of the returns were driven by a company that manufactures diesel engines for tractors, followed by returns from a small allocation we had to Embassy REIT. On the flipside, our allocation towards textiles and chemical players weighed down the returns.A) If someone had invested INR 1 crore, they would have made a net gain of 17l. However, we don't encourage a short-term investing mentality. For all I know, the performance could have gone south in 1 believe 1-year returns are a matter of luck rather than predicated on the skill to analyse future a fundamental thesis to play out and the stock prices to reflect that fundamental performance rightly, it takes a minimum of 2.5 years.A) Most importantly, we keep zero exposure to PSU. The dividend yield chaired by PSU's is usually north of 4%, and yet we don't touch this during the PSU rally in 2023, we were averse to investing in PSU as we prefer private players, given their intention to report profits above all we invest in companies that have a dividend yield greater than 3% while having a future growth outlook of greater than 20%. - Majorly, dividend-oriented funds are focused on investing in the large-cap space, while we focus on the small and mid-cap space, where the opportunities are niche.A) We get asked this question a lot. It's usually the large conglomerates with infallibly stable cash flows that declare dividends to their fund philosophy revolves around finding companies with a 3%+ dividend yield while they are moderately spending on capex, have low debt, and have a sustainable business model, all the while being in the small and mid-cap aren't just focused on investing in high dividend-yielding stocks; if that were the case, we would have had a 100% allocation towards PSU. We are focused on capital appreciation along with dividend income for the shareholders.A) There are a host of variables we consider while investing. The most important of them being corporate governance – no major related party transactions, management has sufficient experience and interest in the business, absence of past accounting malpractices, the business model should be sustainable, and the company should have a competitive edge – this need not be in tech or capacity – it can include longstanding purchase agreements with the buyers, strong distribution channels that can't be easily replicated, or difficult-to-obtain growth outlook based on our research should be upwards of 20% CAGR – revenue and profits. All these factors are beyond the fact that the company should be a dividend-paying paying.A) There's a 10% allocation in the model portfolio to Shree Digvijay Cements and Bhansali Engineering. Expanding on Shree Digvijay, we believe the new capex of INR 250 crore for the cement and clinker plant will improve the business prospects once the plants are up and an allocation towards commodities, auto component players, textiles, and a small allocation towards banking keeps our portfolio diversified across sectors while being invested in companies with high growth prospects.A) The standard deviation is slightly higher than the BSE 500 benchmark. We are frankly not focused on managing the impact of daily price action on the portfolio – if that were the case, it would be difficult for us to stay focused on the company are obsessed with how the company is performing/will perform rather than the daily price action. Given that we are entering at the right valuations, the fundamental performance should reflect on the respective stock prices in a matter of 2.5 - 3 that being said, where the investment opportunities are scarce, we sit on cash. In fact during September 2024, we were sitting on 54% cash as the valuations were stretched and mostly uninvestable.A) FY26 will be a robust year for our portfolio. Beyond the India-Pakistan and US tariff uncertainty, manufacturing firms we speak to are doing well. Many of the companies we speak to are operating at 80% capacity FTA with the UK after decades of negotiation, the soon-to-materialise trade agreements with the US and EU, and the export demand switch from China are some of the factors that will drive the earnings and subsequently our portfolio returns. All in all, we are looking beyond these short-term geopolitical situations.A) We are inclined towards auto component players, chemicals, and textiles in the dividend yield fund. There's a small allocation towards REIT in order to enhance the dividend yield in the overall summary, our major allocation is towards manufacturing. Given the trade tensions and simultaneous trade negotiations, the export market will open up drastically for manufacturers. The weightage on banking and IT has always been low for us.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Economic Times
06-05-2025
- Business
- Economic Times
ETMarkets PMS Talk: Karan Aggarwal on India's 10-year wealth themes - Banks, infra & financial inclusion to lead
In this episode of ETMarkets PMS Talk, we speak with Karan Aggarwal, Co-Founder and CIO at Elever, a quant-based PMS, who shares his insights on India's evolving investment landscape and the factors shaping long-term wealth creation. ADVERTISEMENT As India navigates global volatility and prepares for its next growth cycle, Aggarwal identifies banks, infrastructure, and financial inclusion as the key pillars that will drive the country's wealth story over the next decade. From the tactical success of the Elever FactorShields Fund, which delivered 20% returns in FY25, to sharp views on the US-led macro shifts and sector rotation strategies, Aggarwal outlines how investors can align portfolios for stability and long-term alpha. Edited Excerpts – Q) Thanks for taking the time out. Please take us through the performance of Elever FactorShields Fund for FY25? A) EleverShields has delivered around 20% in total returns over FY 2025 while benchmark has delivered around 11% during the same are in market correction since Sep 2024 and EleverShields has delivered losses of around 7% during same period vis-à-vis losses of around 11% for the benchmark. Strategy outperformed benchmark in 7 out of 12 underperformance of around 2% came in month of EP 2024, a month marked with extreme bullish movement. ADVERTISEMENT Q) How much wealth would have been generated if someone would have invested Rs 50 lakh at the beginning of FY25? A) 20% returns translate to gains of INR 10 Lakhs on investment of INR 50 Lakhs. In this hypothetical scenario, investor would have sitting at corpus of INR 60 Lakhs. ADVERTISEMENT Q) What is the primary investment strategy of Elever FactorShields, and how does it aim to enhance risk-adjusted returns?A) Elever FactorShields provides tactical exposure to relatively low-risk factors such as low volatility, dividend, quality, and value, with 100% allocation restricted to the top 200 companies listed on the NSE (midcap and large-cap space).Portfolio building involves a two-step process. In the first step, individual factor portfolios are constructed around multiple factors with the goal of alpha maximization. Each of these factor portfolios is designed to outperform the broader markets over a holding period of 10-15 years. ADVERTISEMENT However, there is significant divergence in the alpha behaviour of different factors. For example, alpha expansion for the low volatility and dividend factors is typically maximized during bearish market conditions, while alpha for the momentum factor is maximized during bullish market the other hand, factors like quality provide consistent but relatively lower alpha across market conditions. Essentially, each factor has its own risk profile and alpha strategy improves risk-adjusted returns by rotating across alpha-maximizing factors in line with market cycles. ADVERTISEMENT Through a tactical rotation model, a market call is made, and based on that call, suitable factor portfolios are selected to build the final portfolio. In a nutshell, the strategy is a "fund of factor portfolios."In FactorShields, exposure is restricted to low-risk factors like low volatility and dividend during bearish phases. During market consolidation or bullish phases, the allocation is increased to moderate-risk factors such as quality and strategy is designed to deliver low-risk alpha to investors with a moderate risk profile, without exposure to high-risk factors or stocks outside the top 200 stocks on the NSE. Q) What is your take on the markets as we enter FY26? A) We are looking at the end of the nearly half-century status quo where the US was printing currency and buying goods and services from other countries while beneficiary countries were providing a part of earnings back to the US government in the form of debt nearly quadrupling since 2008 GFC and interest payments at around US$ 1.5 Trillion, this economic model is way past its expiry US is expected to opt for 'voluntary recession' in the next 12 months to navigate the biggest debt restructuring exercise in human history and it would create multiple 'volatility ripple' events (we have already seen tariff tantrums) throughout FY can have multiple-degree impacts on the Indian economy as the IT sector is one of the largest sources of white-collar employment with secondary negative impacts on real estate sectors of dollar cities such as Gurgaon/Bangalore and urban said that, relative underperformance of India vis-à-vis global peers in last 6 months of FY 25 has placed it favourably on technical charts in FY 26 and we expect Nifty 50 respect bottom of 21,300-21,800 during global volatility events with sustainable recovery expected from June-July onwards on the back of USD depreciation, low inflation and FII rotation away from have seen some proactive steps from the government/RBI to counter global headwinds with budget tax incentives, RBI rate cuts/liquidity boosters and a potential Indo-US trade we expect the Nifty 50 to make a new high by Diwali 2025, the trajectory of markets would be largely decided by the effectiveness of aforementioned initiatives in neutralizing adverse impact of global disturbances. Q) Which sectors are looking attractive for the medium to long term? A) In the medium-term, consumer staples and power utilities look good as they are driven by domestic demand and largely protected against demand rural consumption in India growing at nearly 2x vis-à-vis urban consumption, sectors linked to rural themes such as seeds and fertilizers also seem to be a decent bet for the next few one is looking beyond the next 2 years, Banks and NBFCs stand out as the bank credit to GDP ratio for India is one of the lowest among G20 India is expected to become a middle-income country in the next 15 years, financial inclusion would catch up with other EM peers and these sectors would be natural beneficiaries. Infra is another 10-year story as India looks to cover the infrastructure gap with China over next decade. However, valuations are quite frothy in many sectors despite recent corrections. Q) Have you tweaked your strategy to counter tariff related volatility in the system? A) We have been expecting a US volatility spike in April 2025 for the last 6 months. Our models were already showing a partial cash call since Sep 2024 and the March rally gave us an opportunity to lighten the portfolio gradually with nearly 60% cash positions by captured global volatility spikes and triggered risk rotation in 1st week of April and we gradually shifted positions to low-risk factors while deploying the cash strategically to leverage the dips. We still have sufficient cash on books to leverage expected dips in first 15 days of May 2025. Q) Can you describe the 'low-volatility anomaly' as mentioned in the fact sheet, and how does Elever FactorShields utilize this concept? A) Typically, all investments follow a standard rule in the long-term – 'High Risk High return, Low Risk Low Return'.For example, savings return 4% as it is zero-risk while FD give 6%-8% as it comes with liquidity risk, Similarly, AAA-rated government bonds provide returns of 8%-9% while low-credit bonds provide returns of 12%-13% as there is default risk with low-credit low-volatility stocks are supposed to underperform broad benchmarks to account for lower risk associated with studies across global markets reveal that in the real world, low volatility stocks tend to outperform broad benchmarks as positive alpha during bear markets is large enough to compensate for negative alpha during bullish phase. This anomaly is globally known as 'low volatility anomaly'.FactorShields improvise on low-volatility anomaly by striving to maximize positive alpha during bear market while maintaining zero or slightly positive alpha during bullish phase, thus enhancing low-risk alpha for investors. Q) What are the main steps involved in the methodology of Elever FactorShields for selecting stocks? A) Factorshields starts with top 200 companies listed on NSE. These stocks have to pass an inversibility filter which sets criteria around market cap, liquidity and free pre-defined factor scoring rules, filtered companies are ranked on various factors such as quality, value, volatility, dividend, alpha, on pre-set security selection and weighing rules around factor scores, factor portfolios are built. Some of the portfolios are a combination of two or more factors and sector/size constraints would also be part of the security selection of these portfolios are managed independently and follow different review the next step, based on output from our proprietary tactical model, a decision is made on which factor portfolios have to be selected and how much weight has to be allocated to each of the selected portfolios which leads to creation of the 'Fund of factor portfolios'.In Factorshields, factor portfolios covering low volatility, dividend, quality and value are considered for selection. Q) What about risk? How do you manage it? A) If we look at back tested data, during 2008 GFC, Nifty 50 went down by around 63% from its 2007 peak while EleverShields cut the losses to 32%.Coming to live data since Oct 2024, while benchmark has lost 9%-10% till Mar 2025, EleverShields restricted the losses to 4%-5%. We would not say that risk is completely eliminated but based on data, it can conclude that risk has been less than standard equity products in the management in EleverShields comes in multiple layers. First of all, lower systematic risk with exposure restricted to low-to-moderate risk risk is also quite limited with exposure limited to top 200 companies on NSE. At model level, tactical models provide insights on factor selection to optimize risk allocation in line with market there are two approaches to manage equity risk. Tactical model provides cash calls which indicate reduction of equity exposure during high volatility periods or periods prone to equity correction. Also, strategically, long positions in index put options are also taken to explicitly hedge market risk. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
