In February, stock markets around the world were jittery, initially due to concerns about interest rate hikes, crude volatility, and uncertainty about geopolitical tensions between Russia and Ukraine, which eventually escalated into a full-fledged war when Russia invaded Ukraine on February 24, causing the biggest single-day crash of CY22 so far.
The benchmark Nifty50 index fell 3.15% during the month, indicating that bears were gradually gaining control of market mood. With the Nifty Midcap and Nifty Small cap indexes shedding 6.8% and 11.4%, respectively, all of the broader indices lost territory and followed the benchmarks' lines. The BSE 500 index fell 4.11%, while the BSE Small cap index dropped 8.77%.
Although mid- and small-cap indexes have dropped significantly, their values are still higher than their long-term averages. Mid- and small-cap valuations are 1.1 times that of the Nifty, with a 10-year average of 0.8X.
Despite a continual stream of negative news, FII outflows, and other uncertainties that heightened volatility and fuelled bearishness, many portfolio management service (PMS) schemes from the broader markets beat the Nifty and the Sensex last month and delivered greater returns.
Top PMS Performance in February 2022
The top performers in descending order are Scient Capital – Aries Mid Yield (+2.61%), Oro Asset Management – All Weather Portfolio (+1.05%), Counter-Cyclical Investment Pvt Ltd – Long Term Value Investing (+0.89%), Karvy Capital – Excel (+0.81%), Karvy Capital – Demeter (+0.71%), and Estee Advisors – I Alpha (+0.60%).
Aries is a debt PMS strategy that seeks to produce superior risk-adjusted returns by investing in Indian debt securities. It uses a buy-to-hold strategy with a 2 to the 3-year horizon to target the intermediate yield space (ratings between AA and BB).
All-weather portfolios are designed to perform well during all seasons of the market, whether that means an economic boom or a bust is underway. This type of portfolio could be suited to an investor who prefers a more hands-off approach – though it isn’t necessarily right for everyone.
Counter-Cyclical Investment Pvt Ltd invests in small companies to generate big returns. Their expertise lies in spotting, evaluating, and investing in promising small capitalisation companies. Their experience has shown that a diversified portfolio of small caps with strong growth prospects and tracked constantly for changes in business fundamentals, generates market-beating returns over time.
Excel is a mid-yield product that prioritises income over capital appreciation through asset allocation to debt. Excel is diversified across securities with a credit rating of investment grade and above only.
Demeter is a Portfolio Management Strategy for investors looking for income and capital growth from their debt asset allocation. The investing goal is to generate long-term capital appreciation and income through interest and secondary market trading of assets (both short- and long-term).
I-Alpha is Estee's flagship market-neutral scheme which does Arbitrage in India since inception in May 2009 and the Hedge fund's India only offering has not had a single negative return month till date since its inception in May 2009
List of the top PMS Performers Category-Wise- Large Cap, Mid Cap, Small Cap, and Multi-Cap for February 2022
The data shows that out of the 272 schemes in February, 53schemes (or 20% of the total) outperformed the Nifty. For the month, there were 8 schemes (3%) that achieved positive returns.
The average category return of large-cap PMS for February 2022 was -3.50% with most of the strategies generating negative returns against NIFTY50’s -3.15% loss. Some of the better performers are Agreya Capital Advisors LLP (-1.09%), Alchemy (-1.67%), and Accuracap (-2.06%)
Large and Mid-Cap
The average category return was -3.34% for February 2022 with few strategies generating returns (though negative) below this number. Some of the schemes in this category are Sykes & Rays (-0.32%) Care Portfolio Managers (-0.50%), IDFC Asset Management (-2.29%), and Emkay Investment Managers (-3.82%)
The 22 mid-cap PMS strategies recorded an average return of -6.47% in the month of February 2022 but slightly above Nifty Mid Cap 100 Index of -6.75%. The overall schemes under the mid-cap strategy generated negative returns. However, some of the better performers are Emkay Investment Managers (-3.30%), TATA PMS (-3.36%), and Ambit Investment Advisors (-3.59%)
Small and Mid-Cap
This category comprises 21 PMS strategies that generated an average return of -6.39% in the month of February 2022. The better performers in this category are Counter-Cyclical Investment Pvt Ltd (0.89%), Altas Integrated Finance (-3.58%), and Valentis Advisors (-4.29%).
The small-cap strategies tracked by PMS Bazaar reported an average return of -7.10% in February 2022. However, this average return fares much better than the BSE Small-Cap that fell -8.77% the same month. Some of the better performers are Prabhudas Lilladher (-2.20%), Fort Capital Investment Advisory Limited (-2.33%), and Right Horizons (-3.01%).
This is the largest category of PMS comprising 161 schemes that generated an average return of -5.09% for the month of February 2022 which is better than the returns of the BSE 500 Index of -4.11%. The top three performers in this scheme are Oro Asset Management (1.05%), Invaasset LLP (0.09%), and Purnartha Investment Advisers Pvt Ltd (0.01%).
Thematic and Sector
The Thematic and Sector comprises 12 schemes that generated an average return of -5.62% for the month of February 2022. Some of the better performers in this category comprise Green Portfolio (-0.97%), Ask Investment Managers Ltd (-3.33%), Marcellus (-3.70%), and Kotak (-3.93%).
Sustainable Returns Through Sector and Stock Rotation
“Sector rotation as a strategy is core to us. I have been a big follower of sector rotation whether it is at IFL or Quest and I believe that this is something which has gone through the different cycles of the market whether it is 8 or 10 years and practically it has seen the various ups and downs”, says Aniruddha Sarkar, CIO and Portfolio Manager, Quest Investment Advisors
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In this monthly review, we also look at how different PMS categories have done across more than 190 schemes
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