FUND LEGEND is a large-cap oriented fund where we invest majority i.e. minimum 60% of the portfolio in large cap companies (Top 100 companies on the basis of market cap in listed space). In most of the cases these stock are leaders or captains in their respective industry. The rest 40% goes into mid-cap companies. These constitute of stocks from either sunrise industry or can come up from bottom-up approach of stock selection. This fund is basically less volatile with moderate risk.

FUND MARVEL is a mid-cap oriented fund where we invest majority (minimum 60%) of the portfolio in mid-cap companies (101 and beyond companies on the basis of market cap) and rest in large cap companies. So this is best suited for risk takers as it is a bit more volatile.

Investment decision comprises of identifying 4 things:

• 1External Opportunities:It means demand/potential demand for the products/services of the company in the industry. For example: L&T: India was a runner without shoes in infrastructure space and L&T recognized this opportunity at its earlier stage.
• 2Business:It should be a scalable business having an Economic Moat (Competitive Advantage) with good profitability and return ratios.
• 3Management:It means a competent as well as ethical management Competent: It means a Management who is focused, has distinct and innovative business strategies, proper Capital allocation policy and is gradually gaining market share followed by its Profit share. Ethical: Who even takes care of minority shareholders and gives bad news as soon as they come to know. Management should also have skin in the game (Majority of Promoter’s networth should be in his business).
• 4Valuation:A good business should be available at reasonable price and should be bought accordingly. If the above three criteria fits in but if the valuations are high, then we wouldn’t buy the stock. Some of the other parameters which we follow are:
  • We don’t time the market nor do we take big cash calls. In the last 8.5 years of managing funds, we have never been on more than 10% cash. Normally, investors time the market with the upcoming big events like election etc. But with the past experience we have learnt to stay tight.
  • We typically hold our investments for the long term. For FY2018 our turnover ratio for LEGEND plan was 12% and 7.5% for MARVEL plan. Many of the stocks which have become multi-baggers still exists in our portfolio like HDFC, Titan, Relaxo, Natco etc. This means we are not price driven but are fundamentally driven.
  • We do not allocate more than 30% in any sector and more than 10% in any stock. This helps us in mitigating risk and makes our portfolio diversified. If the stock appreciates then it can cross this limit.