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Abakkus All Cap

Scheme Rating

IME Scheme Rating

5 of 5 stars

Can be considered for Investing: While the AMC & Strategy are relatively new esp compared to other larger fund houses in India, the strong investment pedigree of Sunil Singhania combined with a clearly defined investment strategy & a strong initial track record, make Abakkus All Cap Portfolio a good option for someone seeking a high-quality investment team for long-term wealth creation.

IME Strategy Rating

5 of 5 stars

Concentrated Flexi-Cap Approach: The strategy is a flexi-cap approach, constructing a diversified portfolio spanning market caps with a 3-5 year holding period. Large-cap allocations are guided by top-down sectoral perspectives, while overall company selections adhere to the meticulous ‘MEETS’ framework, ensuring a dynamic and well-informed investment strategy. Their investment philosophy focuses on strong fundamentals through the ‘MEETS’ framework with a clearly defined philosophy driven by a rigorous investment process. The strategy includes quantified benchmarks to gauge quality, growth & valuations, along with clearly defined benchmarks around concentration, stock and sector exposures.

PMS Scheme Ratings are driven by IME’s Proprietary Scheme Rating Methodology, which takes into account our ratings of the Scheme’s investment strategy, its maturity, the investment team, and our separate rating on the AMC that runs this particular scheme. Our views on each of these individual criteria are available via the IME RMS – which you can view by reaching out to one of our relationship managers (using either the live chat or book appointment feature on this site).

IME View on Abakkus All Cap

Type: Flexi Cap | GARP | AUM (5114.3 cr) | Inc Date (29 Oct 2020)

Investment Strategy

Abakkus All Cap strategy is a benchmark agnostic multi-cap fund with an aim to generate alpha and wealth creation with a 3-5 years investment holding period.

The strategy allocated to large-cap companies based on a top-down sector view with a focus on stability and aims to generate alpha through broader market companies (mid and small-cap) with sustainable business and high ROEs

LARGE-CAP 

  • Approach: Focus on aspiring leadings vs paying a premium for leaders/market favourites

MID-CAP

  • Approach: Invest in companies which are amongst top players in the respective industries and have the potential to become large-cap companies
  • Avoid: stories and broken balance sheets

SMALL-CAP

  • Approach: only when potential payoff is asymmetric

Investment Philosophy

The philosophy is driven by a bottom-up approach with a very strong focus on balance sheets and earnings. Each investment opportunity is based on individual merit rather than the theme or style.

Tenets of Investment Philosophy

  • Focus on Alpha Generators: Abakkus focuses on three aspects to generate alpha. Identify ‘growth companies’, where profitability is higher than the market average, value defined as fundamentally under-priced with reasonable growth expectations, and mid-cap with scalable businesses that have the potential to become large-cap in nature.
  • Contrarian in nature: prefers to be the first, early and/or only investors in the identified companies.
  • Buy-and-hold: Invest in businesses as a partner than a stock-picker
  • Risk-reward: focus on the price and value derived by looking at ‘what is in the price?’

Abakkus’s MEETS Framework

  • Management (M): Evaluation based on capital allocation track record and fairness to minority shareholders
  • Earnings (E): Quality of earnings, cyclical or structural in nature and ability to double profits in 4 years or less or where EV/EBITDA can half in 4 years
  • Events/Trends (E): Evaluation of events on the horizon or disruptive trends/new themes
  • Timing (T): driven by the principle of ‘good company is not necessarily a good investment if the price is not right’. Focus on ‘what is the price discounting’ and time horizon of the investment.
  • Structural (S): Size of the opportunity, competitive moat and consistent growth in profits.

Avoid the Four C’s

  • Chase Momentum: let fundamentals drive our investment decision rather than price movements
  • Churn unnecessarily: No trading. No needless churning of the portfolio
  • Copy and Mimic: will not be influenced by ‘herd mentality’.
  • Credit Risk – Fractured Balance Sheet: very difficult to rebuild a broken balance sheet and these stocks eventually turn into value traps and hence, are best avoided

Exit Strategy

  • Fundamentals don’t pan out as expected due to sector deterioration, company-specific issues, and governance issues.
  • Stocks may do much better than expected.
  • Position becomes insignificant and can’t /don’t want to add.
  • New investment ideas are better than existing holdings in terms of risk-reward.

Investment Process

Abakkus All Cap fund follows a ‘5D Process’

  • Discover: a universe of 6000 companies, ~1500 companies are investable | discovery is driven by annual report, analysts, inhouse screeners, ecosystem, team experience, and news flow
  • Delve: Deep dive into ~350 companies through ‘MEETS’ framework | Deep dive and analyse companies across management quality, earnings, events, timing and structural trends
  • Develop: Macro and micro analysis on ~100 companies | further research driven by management meetings, potential triggers, peer comparison, financial models and competitive advantage
  • Detail: Idea generation on ~75 stocks | driven by portfolio construction on liquidity, sector exposure, risk management and portfolio beta aspects
  • Deliver: Portfolio construction and risk monitoring of ~30 stocks | monitoring through quarterly reviews, news flow and sell discipline

Trailing Performance

1yr 3yr 5yr Since Inception
Abakkus All Cap 48.2 27 34.6
S&P BSE 500 TRI 39.5 19.5 26.1
Alpha over Broad Mkt BM 8.7 7.5 8.5
Nifty 500 38.4 18.1
Alpha over Category BM 9.8 8.9

Performance as of: 28-Feb-23 | Inception Date: 29-Oct-20

Fund Managers

Sunil Singhania | 5-star rated FM

Founder | 29 yrs Experience | 6 yrs at current firm

Past Experience: CIO (Reliance Capital), Director – Research and Institutional Sales (Advani Share Brokers)

Sunil Singhania comes with ~3 decades of rich experience. He was a CIO at Reliance Capital for over 20 years before starting Abakkus. Prior to Abakkus, in his role as Global Head ‚ Equities at Reliance Capital Ltd., he oversaw equity assets and provided strategic inputs across Reliance Capital Group of companies including asset management, insurance, AIF, and offshore assets. And as CIO ‚ Equities, Singhania led Reliance Mutual Fund equity schemes.Furthermore, he led Reliance Nippon Life Asset Management Ltd.’s international efforts and was instrumental in launching India funds in Japan, South Korea, and the UK, besides managing mandates from institutional investors based in the US, Singapore, and other countries. He is a CA rank holder and a CFA charter holder and graduated in commerce from Mumbai University.

Aman Chowhan | 4-star rated FM

Fund Manager | 24 yrs Experience | 6 yrs at current firm

Past Experience: Portfolio Manager (Reliance Capital), Equity Analyst (Reliance MF, TAIB Securities, Tata TD Waterhouse Securities)

Aman Chowhan comes with 2 decades of experience in the equity markets. Prior to joining Abakkus, he was Portfolio Manager for all local and offshore schemes for the PMS division of Reliance Asset Management. Having worked at the Singapore office of Reliance, Aman brings along a regional and global perspective in investing and has a strong track record across ‚ benchmark, absolute long, and long-short strategies. Before joining Reliance in 2005 he was associated as a research analyst with TAIB securities, Tata TD Waterhouse, and other brokerage firms. Aman holds an MBA degree from Mumbai University.

Fee Structure

Fee StructureFee
Fixed Fee Structure2.5
Variable Fee Structures1.75% fixed + 15% above 9% hurdle
Exit Fees1yr(1.5%)

AMC

AMC: Abakkus PMS (click link for detailed AMC review)

Strong FM-Founded AMC and Team: The strong pedigree of the core investment team, a clearly defined investment strategy and a strong initial performance track record make Abakkus a strong AMC to consider investing in.

AMC Rating

5 of 5 stars

AMC Pedigree

5 of 5 stars

AMC Size

5 of 5 stars

Team Pedigree

5 of 5 stars

Inv Philosophy

5 of 5 stars

Performance

4 of 5 stars

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