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 fund universe.
IME Strategy Rating
Smallcap Focused: NAFA Asset Managers Small Cap Portfolio seeks to invest in small cap businesses with visionary management having the potential to scale up and grow exponentially over a 5 to 7-year time frame. Nafa 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 Small Cap
NAFA Small Cap- Investment Strategy
NAFA Small Cap invests in small cap companies that have the ability to scale up and grow exponentially over a period of 5-7 years and to also generate higher risk-adjusted returns. They follow a framework that emphasizes on investing in growth stocks with quality management, high ROE and low leverage. Out-performance is achieved by investing in emerging market leaders and take active sector, stock and cash calls. Small Cap is a concentrated portfolio of 20-25 stocks in order to avoid dilution 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 Small Cap | 34.4 | 22.1 | 28.8 | 24.7 |
| S&P BSE 500 TRI | 41.1 | 18.4 | 22.4 | 20.5 |
| Alpha over Broad Mkt BM | -6.7 | 3.7 | 6.4 | 4.2 |
| Nifty Smallcap 250 | 50.5 | 25.3 | 31.2 | |
| Alpha over Category BM | -16.1 | -3.2 | -2.4 |
Performance as of: 30-Sep-24 | Inception Date: 11-Mar-19
Fund Managers
Balaji Vaidyanath | 3-star rated FM
Fund Manager | 21 yrs Experience | 9 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 Structure | Fee |
|---|---|
| Fixed Fee Structure | 2.5 |
| Variable Fee Structures | |
| Exit Fees | 1yr(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.
Note: PMS AMC & Scheme Reviews and Ratings are based on IME Capital’s Proprietary Review and Rating Methodology (read more here: AMC Rating & Scheme Ratings). These reflect the unbiased views of our central research team, based on our assessment of the investment value of these PMS/AIF strategies for our investors. We follow a highly stringent rating-criteria, where approximately 50% of PMS AMC’s & strategies would be rated 2-star or below (this is not meant to indicate that these funds are not investment-worthy, but that they do not currently fulfill the requirements we focus on for recommending funds to our investors — based on our internal views on the merit of the AMC/strategy relative to peers). Reviews & Ratings are primarily based on research of publicly available information (SEBI disclosures, PMS websites, PMS-aggregation platforms, webinar recording, media interviews etc.) and no explicit consent is required from AMCs for the same. While we endeavour to do further due-diligence via direct interactions with the investment teams of AMCs, this is typically restricted to AMC’s that meet our foundational fund selection criteria (reviews on lower-rated AMCs are often based solely on publicly available information). The views reflected in our Reviews & Ratings, are our independent views and may not be shared by the AMC’s and the investment teams. Please read detailed disclaimer for more.