Equity indices had very little to cheer about in February. Despite the generally positive outlook on the economy and markets following the Union Budget, the Adani-Hindenburg saga weighed on sentiments. Another dampener was the Reserve Bank of India’s unexpected rate hike early in the month.
All the main benchmarks dipped during February 2023. FIIs were on a selling spree. They net sold Rs 11,090 crore in the cash market during the month. As a result, the Nifty, the mid, small-cap, and broader market indices all declined 1.82-3.07%.
During the month, 205 of the 305 (or more than two in three) PMS strategies delivered higher returns than the Nifty. The PMS strategies delivered -1.44% returns on average during the month, as against -2.03% managed by Nifty.
Multicap strategies had a good run during the month, as a majority outperformed benchmarks during the month.
Top 10 PMS Strategies of February 2023
Here are the top 10 funds from the 305 PMS strategies tracked and analyzed by PMS Bazaar.
As indicated earlier, multi-cap strategies dominated the list of top 10 performers with half the schemes in the list coming from that category during the month. A couple of small-cap strategies did well, too, and were featured in the list.
Vallum Capital’s Vallum India Discovery fund was the best
performer during February 2023. It delivered 3.38% returns during the month and
follows the ‘growth at reasonable price’ strategy.
Next in the list and with the same returns as the first fund, Unique Asset Management’s Strategic fund gave 3.38% returns.
Coming third in the top 10 list was the Mega Trends strategy from Marathon Trends with 3.35% returns.
Get in-depth insights about the remaining entries on the top-performing PMS List of February 2023 and other PMS strategies you want to explore by subscribing to our portal. Subscribe and get access to insightful PMS data & comprehensive PMS comparisons: Subscribe NOW
The returns of the top 10 PMS strategies in February 2023 and the Nifty, which is depicted by the bar line, are shown below.
Category-wise performance of PMS players
Here is the chart that represents how various strategies across market capitalization were delivered during February.
The midcap segment was relatively the best among the lot with a -0.93% return during the month. Next was the multi-cap strategy with a -1.46% return, closely followed by the small & midcap categories. All other strategies delivered a -1.5% return or less during February. The thematic strategy gave the least returns, at -2.21%.
The small-cap category had a moderate show with 12 of the 18 strategies (two in three) beating the BSE Small Cap return of -3.07%. At the top spot was Aequitas Investment Consultancy’s India Opportunities Product with 2.18% returns. This fund follows a mix of value, contrarian, and growth strategies and invests in small and microcaps.
Second, in the segment was the Emerging Giants strategy of Ambit Investment Advisors with 2.03%. The strategy is focused on investing in market leaders in niche categories early in the cycle.
O3 Special Situations Portfolio of o3 Securities was third with 0.97%. It invests in small caps where there is a visible business turnaround and high growth potential.
The performance of the category in relation to the BSE Small Cap is depicted in the graph below.
Small & Midcaps
This category has 29 PMS strategies and delivered -1.50% in February 2023. At the top was the Vallum India Discovery strategy of Vallum Capital Advisors with 3.38% returns. Next comes the Ten X strategy of Ambit Investment Advisors, which is focused on investing in companies that could potentially grow their earnings 10x in the next 12-15 years, yielding a return of 1.57% in February. Magadh Capital Advisors’ Future Stars strategy, which takes a sector-agnostic approach, came third with 1.18% returns in February.
Midcap strategies put up a fair show in February with as many as 14 of the 21 schemes outperforming the Nifty Midcap 100 return of -1.82% during the month. The category average was -0.93%. Topping the chart was the Clean Tech Portfolio strategy of Nafa Asset Managers with 2.24% returns. Next on the list was the Gems strategy of Emkay Investment Managers, which follows a buy and hold strategy, with 1.6%. Nippon India’s Emerging India strategy also delivered 1.6% returns during the month.
How the midcap category fared against the benchmark index Nifty Midcap 100 in February is shown below.
Large and Midcap
The 11 large and midcap funds delivered -1.47% on average in February 2023. True Beacon Investment’s Equity Factor Quant strategy came first with a 0.1% return. The Alpha Fund of Green Lantern Capital was next with a -0.11% return, while Motilal Oswal’s Multifactor Equity delivered -0.13% in February and was third in the pecking order.
Except for one fund, all strategies were in the red during the month.
The Large cap category performed fairly well in the month. As many as 19 of the 26 strategies over 70% of the funds did better than the Nifty. The category average return was -1.58% in February. LIC MF’s Factor Advantage strategy, which follows a hybrid of active and passive stock selection process, came on top with a 0.96% return during February. Accuracap’s Alpha 10 strategy was second on the list with a 0.43% return. The Top 200 Core Equity Portfolio from Aditya Birla Sun Life AMC PMS gave a 0.4% return.
In the chart below, the performance of the large-cap category average against the returns of the Nifty during February 2023 is depicted here.
Multi-cap strategies were among the best-performing categories during February. Of the 149 funds in the category, 117 (nearly 8 in 10 strategies) outperformed the broader market BSE 500 index return of -2.92% during the month. The category average return was -1.46%.
First in the chart was Mega Trends Strategy from Marathon Trends with 3.35% returns. The Core Fund strategy of Stallion Asset, which invests in a mix of proven and emerging monopolies, come second with a 3.26% return. Next, third place was taken by Composite Investments’ GARP fund, which invests in companies that benefit from the India growth story, with a 2.43% return during February.
The graph below gives the performance comparison of the multi-cap PMS category and the benchmark BSE 500.
The thematic category underperformed in February and the category’s average return for the month was just -2.21%. Of the 11 thematic strategies, only one posted a positive return. Anand Rathi Advisors’ MNC PMS strategy came on top with a 0.54% return in February 2023. As the name suggests, the fund invests in multinational companies listed in India. The India Next Portfolio of Renaissance took the second spot with a -0.59% return. Kings of Capital from Marcellus was third with a -0.94% return in February 2023.
There appear to be no positive triggers for the markets at the moment. Even as investors tried to get past the negative sentiments after the Adani saga and RBI’s 25 basis points interest rate hike, we had bad news flow from overseas. Silicon Valley Bank’s failure has shaken investors and depositors in the US, and though not a contagion, a few ripple effects were felt around the world. The start-up ecosystem in the US and also in India is likely to remain shackled for the time being with the funding winter persisting.
How the Federal Reserve reacts on the interest rate front, and what RBI’s reactions would be is likely to determine the trajectory for the benchmark indices in the immediate future.
Private Market and Alternative Investments - An NRI Perspective
For NRIs considering avenues to invest and participate in the India growth story, here is a lot of useful information and perspective. Mr. Krishnan Ramachandran-CEO Barjeel Geojit Financial Services answered questions from Mr. Vikas Sachdeva, MD, and Mr. Madanagopal Ramu, Head-Equities, both from Sundaram Alternates, on the evolving investment opportunities.
Markets start the New year on a dull note, even as 171 PMS strategies outperform the Nifty.
Continuing with the weak momentum in the previous month, the markets continued to sulk in January. Given that it was a period running up to the Union Budget, markets were in an uncertain mode. All the main indices ended in the red during January 2023. FIIs continued to sell. They sold stocks worth Rs. 30,000 crore during the month. The Nifty as well as the mid and small-cap indices recorded somewhat similar performances in January. During the month, 171 of the 311 PMS strategies (a little over half) delivered better returns than the Nifty. Asset allocation would have worked, given that multi-asset fund strategies had a strong January.
Global Solutions for Evolved Investors
For decades, HNIs and UHNIs have preferred traditional investment options such as physical assets like gold and real estate, direct stocks, fixed deposits, and bonds. As the financial landscape has transformed in recent years, so has the way HNIs invest their money. Traditional investment options are being replaced in recent times by innovative investment solutions that take into account the risk-reward profile of the investor and assist the HNIs in preserving and growing their wealth. The emerging investment avenues where the HNIs are putting their money in recent times and are also expected to remain the key investment themes in 2022 are AIFs, MLDs, Real Estate Investment Trusts REITs, InvITs, as well as Pre-IPO securities, and offshore investments. They also necessitate a larger investment corpus and are typically handled by experienced and highly skilled wealth managers and fund managers who understand the HNIs' investment goals and expectations.
Key to Consistent Performance
Investing today is incomplete without talking about fund vehicles such as mutual funds. They offer many benefits, like easy access to financial markets, portfolio diversification, and ease of monitoring, among a host of others. When you invest in mutual funds, every investment decision that a mutual fund manager takes involves a degree of risk. Consistent performance over market cycles indicates experience and expertise to navigate a fund portfolio through tough times and generate superior returns when markets are climbing. Hence, it is also essential to pay attention to the portfolio characteristics of a mutual fund scheme, as the fortune of a mutual fund scheme is closely linked to the portfolio it holds. If the portfolio characteristics of the scheme are not up to the mark, it could show up in inconsistent returns. In this webinar blog, we shall discuss the Indian Market outlook for 2023, the Performance of PMS, the China Plus one strategy, the Performance of Indian IPOs, and the Indian Automotive Industry, among others.