AMC Background

Karma PMS, established in 2005, has a long operating history spanning nearly two decades across multiple market cycles. The firm is positioned as an institutionally oriented PMS house, combining deep fundamental research with a disciplined, process-driven investment framework.

The firm is co-founded and led by Rushabh Sheth and Nikhil P. Desai, both serving as Co-Chief Investment Officers and bringing over 30 years of buy-side experience each. Their backgrounds span portfolio management, mutual funds, offshore mandates, and institutional equity investing, with prior senior roles at organisations such as Kotak Mutual Fund, ASK Group, Raymond James, and ABN AMRO Private Banking. Karma Capital’s culture explicitly emphasises team-based decision-making over star-manager dependency, with structured investment committees, cross-pollination of ideas, and rigorous internal debate forming the backbone of its research and portfolio construction process. The AMC’s identity is that of a research-intensive, high-conviction equity manager focused on generating differentiated outcomes through patience, discipline, and independent thinking.

Investment Philosophy

Karma Capital’s investment philosophy is anchored in patience and discipline, with a clear emphasis on identifying businesses at inflection points where the rate of change in fundamentals is accelerating ahead of market recognition. Rather than focusing on absolute growth levels, the firm prioritises improvements in growth, return ratios, or business mix, viewing inflection as a powerful driver of alpha. The strategy follows a GARP (Growth at a Reasonable Price) orientation, evaluating scalability and growth potential through multiple valuation lenses to ensure that optimism is not overpaid for.

A central element of the philosophy is early-cycle investing - identifying companies undergoing positive changes in business environment, industry structure, or internal execution before these shifts are fully reflected in stock prices or market narratives. Karma Capital seeks to invest at the stage where fundamentals are improving, but consensus positioning and valuation remain conservative. This requires independent thinking and a willingness to be contrarian at times, supported by in-house research depth rather than external consensus.

Bottom-Up Research and Idea Generation

The investment process is benchmark-agnostic and bottom-up, starting from a broad listed universe and progressively filtering companies based on acceptability criteria such as liquidity and market capitalisation, followed by long-term investment attributes including financial strength, management capability, and sustainable growth. A rigorous deep-dive phase involves management meetings, network and channel checks, and site visits, culminating in a focused coverage list from which high-conviction portfolio ideas are selected. The research framework places particular emphasis on catalysts for change, market dynamics, competitive moats, opportunity size, rate of change in ROCE and ROE, capital allocation efficiency, and valuation-risk assessment.

Portfolio Construction

Portfolios are constructed as high-conviction, concentrated baskets typically comprising 20–25 stocks, unconstrained across market capitalisation but with high active share. Position sizing is driven by conviction and risk diversification rather than benchmark weights, with stock limits of 10% and sector limits of 30% at the time of investment. The strategy is generally fully invested, reflecting confidence in idea selection rather than tactical cash calls.

Risk management is embedded through diversification across market caps, liquidity discipline, and explicit limits on exposure relative to free float. While some investments may be early-cycle and therefore volatile in the short term, portfolio-level risk is mitigated through a mix of mature and emerging businesses, controlled concentration, and continuous monitoring. Exit decisions are process-driven and triggered by changes in fundamentals, governance deterioration, valuation excess, or availability of superior alternatives, recognising that disciplined selling is as critical as stock selection.