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NAFA Emerging Blue Chip

Scheme Rating

IME Scheme Rating

The Scheme does not meet our selection criteria at this time

Not a recommended fund: This is not a recommended fund, primarily because the AMC does not meet our selection criteria. We believe that there are better fund houses to invest in, within the Indian mutual fund universe.

IME Strategy Rating

Small & Mid Cap Focused: NAFA Asset Managers Emerging Bluechip Portfolio seeks to invest in small and mid-cap businesses with visionary management having the potential to scale up and grow exponentially over a 5 to 7-year time frame. It follows a growth-focused investment philosophy. There is however limited public information on how they choose stocks or the rigour with which growth is implemented.

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 NAFA Emerging Blue Chip

Type: Mid & Smallcap | GARP | AUM (268.5 cr) | Inc Date (01 Mar 2016)

NAFA Emerging Bluechip Portfolio- Investment Strategy

NAFA Emerging Bluechip Portfolio invests primarily in Mid & Small Cap companies that have the potential to scale up and grow exponentially over a period of 5- 7 years and have the ability to generate high risk-adjusted returns. They follow a framework that seek to invest in growth stocks with quality management, high ROE and low leverage. They seek to achieve out-performance by investing in emerging market leaders and take active sector, stock and cash calls. Emerging Bluechip Portfolio is a concentrated portfolio of 20-25 stocks to avoid diluting returns through over-diversification.

Investment Philosophy

NAFA PMS follows a growth approach, with an aim of investing in quality Indian businesses that have a high growth potential. They invest in quality companies in India by focusing on: 

  • Strategic Capital Allocation: NAFA ensures they employ effective capital allocation and risk mitigation strategies in order to generate risk adjusted returns while choosing companies to invest in. 
  • Focused on Growth Assets: Focused on growing asset class in India by investing in quality companies in India with high growth potential. 
  • Risk and Return Optimization: In order to generate risk adjusted returns NAFA applies effective investment strategies with a well-defined risk mitigation mechanism to maximize value for their investors. 

Investment Process

NAFA Asset managers want to generate alpha by creating Benchmark Agnostic Concentrated portfolios of good quality businesses by utilizing a Bottom Up stock picking driven fundamental research. 

Stock Selection

Stocks are selected based on a rigorous Bottom up investing process which is driven by a fundamental research that is also overlaid with a Top-Down macro view. Screening of stocks are done against a quantitative and qualitative internal framework. 

Quantitative screening uses metrics like High Grwith, High ROCE, High Cash Flow Conversion and Low Leverage. Qualitative screening  ensues assessment of companies based on their Corporate Governance practices, Promoter Track Record and Promoter Share Pledges. 

Lastly, a valuation process is used which includes a blend of science and art, to shortlists stocks on the basis of businesses offering high return potential and a reasonable margin of safety. 

Allocation of Selected Securities

not more than 10% invested in single stock

not more than 35% invested in a single sector 

Risk Associated with Investment Approach 

They follow a concentrated portfolio approach to generate high returns, however high returns lead to high risk and volatility in returns. NAFA follows a buy and hold approach. 

Risk Management

Portfolio Construction

Portfolios are constructed on the basis of direction of an experienced investment committee keeping in mind concentration risk of sector and stocks. Limits for exposure to a single stocks and sectors has been set with no single sector or stock exceeding a defined percentage of portfolio compositions at any time to hedge against concentration risk. Risk-reward compositions and investment thesis on each stock is constantly monitored. Monitoring helps them to move on from a position in case of low conviction. The portfolio is reviewed periodically by high level investment and risk committee. This committee comprises of a seasoned and well respected industry professionals.

Trailing Performance

1yr 3yr 5yr Since Inception
NAFA Emerging Blue Chip 47.6 29 26.4 17.4
S&P BSE 500 TRI 39.5 19.5 19 17.5
Alpha over Broad Mkt BM 8.1 9.5 7.4 -0.1
Nifty Midcap 150 56.3 26.5 24.4
Alpha over Category BM -8.7 2.5 2

Performance as of: 28-Feb-23 | Inception Date: 01-Mar-16

Fund Managers

Balaji Vaidyanath | 3-star rated FM

Fund Manager | 20 yrs Experience | 8 yrs at current firm

Past Experience: Vice President & Principal Officer (Sundaram AMC), Portfolio Manager PMS (Sundaram AMC), Equity Research Analyst (Sundaram AMC), Equities & F&O Dealer (Kotak Securities)

Balaji Vaidyanath has experience of more than a decade in equity markets first as a research analyst and then as a portfolio manager at Sundaram Asset Management.

Fee Structure

Fee StructureFee
Fixed Fee Structure3
Variable Fee Structures
Exit Fees1yr(1%)

AMC

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

Not a recommended AMC: NAFA PMS is still sub-scale and has yet to prove its credentials as a good long-term PMS player.

NAFA PMS does not meet our criteria for PMS AMC Selection at this time. Understand our AMC rating criteria at AMC Rating Criteria or contact us via the LiveChat to learn more.

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