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The Fund has been set up with the objective to achieve long term capital appreciation by investing in permissible securities/instruments in accordance with the Fund Documents and the IFSCA FM Regulations.
Our investment philosophy is guided by a simple principle: own strong businesses at reasonable valuations. Owning strong businesses in their respective domains reduces the risk of permanent capital loss and paying reasonable valuations mitigates the risk of poor long-term returns. Further, as the time horizon increases, the risk in equities reduces. We aim to follow a low churn strategy that also lowers costs.
The portfolio is well diversified across sectors and key economic variables. The Fund is overweight Banks, Software & Services, Pharmaceuticals, Transportation and Consumer Services and is underweight Automobiles (mainly auto components), Capital Goods, Energy, Financial Services and Materials. Exposure to Insurance is close to market weight.
In our opinion, portfolio companies follow good ESG practices. Interestingly, companies in conventional power have plans to rapidly scale up their renewable portfolio.
We believe that, following recent outperformance, Small and Mid Caps (SMIDs) as a category are once again expensive relative to large caps. Therefore, we have adopted a selective approach to investing in SMIDs and the portfolio is tilted towards large caps.
Currently, the Fund is well-diversified due to low dispersion in valuations across sectors. If and when we see meaningful divergences in some pockets, we will look to consolidate the portfolio holdings.
The Fund is also registered as a Category I Foreign Portfolio Investment (FPI) bearing registration number INIGFP036325 under the FPI Regulations.
