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Equirus Core Equity

Scheme Rating

IME Scheme Rating

The Scheme does not meet our selection criteria at this time

Prefer Equirus as a small-cap specialist for now: Equirus has been one of the best-performing small-cap specialists in India. Equirus Core Equity is a new strategy that is outside of Equirus’ historical preference towards small-cap. We would wait for the strategy to age before recommending the same.

IME Strategy Rating

Concentrated Flexi Cap Strategy: The investment objective is to generate capital appreciation predominantly through investments in equities across market capitalization curve with a long-term perspective.

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 Equirus Core Equity

Type: Flexi Cap | GARP | AUM (92.9 cr) | Inc Date (27 May 2022)

Investment Philosophy

Equirus Core Equity is a concentrated multi-cap strategy. This strategy is seeking businesses with a market cap of 10,000-40,000 Cr. The strategy follows a non-model portfolio approach.

Focus on multi-cap driven by certain large-cap characteristics such as size (market leadership), diversification (diversified revenue streams), survivability (better access to capital) and tech/human capital (ability to attract talent and invest in tech). 

Equirus Core equity focuses on investing in businesses that have a large headroom for growth and have a competitive advantage which requires little capital to grow to utilise a mix of top-down and bottom-up approaches:
  • Profitable: high ROCE and ROE | less capital-intensive growth
  • Growth: large opportunity size and runway for growth 
  • Longevity: sustainable competitive advantage over the medium to long term
  • Reasonable Price: available at a reasonable price defined by a reasonable margin between market price and intrinsic value, and should be able to have high cash generation

Investment Strategy

  • Core Longs (80%): High-quality companies, high-conviction long-term positions, low turnover | 2-5 year horizon
  • Tactical Plays (10%): Lower quality usually when compared to Core Longs, enhanced price discipline
  • Opportunistic (10%): Special situations, price undervalued/oversold opportunities, undiscovered/low-coverage opportunities

EXIT STRATEGY

  • Partial Selling: when fundamentals start to deteriorate | weightage is high
  • Complete Exit: investment thesis might not play out | argument changes due to changes in environmental or company-related factors

PREFERENCE

Equirus Core Equity looks for companies that require less capital to grow and have a large room for growth and a durable competitive advantage with a tilt towards promoter-run companies, disruptors or beneficiaries of disruption and businesses seeing positive changes.

AVOID

PSU except in a few cases, companies susceptible to large-scale disruptions and companies with poor governance.

Investment Process

  • Step 1 Universe: Listed Indian equity space with businesses that offer high growth, existing or potential market leadership driven by competitive advantage, proven management, track record, turnaround cases, corporate action, and under-ownership.
  • Step 2 Screening, Research & Analysis: Screening for businesses with superior/improving future profitability at reasonable valuations and strong BS.
  • Step 3 Formulation of Investment Rationale: Evaluate stocks based on 3yr CAGR potential.
  • Step 4 Accepting ideas from 25-50 Stocks: Accepting stock ideas and inclusion in portfolios and continually monitoring investment thesis and weightage.
  • Step 5 Selection of 20-25 Stocks

Trailing Performance

1yr 3yr 5yr Since Inception
Equirus Core Equity 24.3 20.9
S&P BSE 500 TRI 39.5 25.3
Alpha over Broad Mkt BM -15.2 -4.4
Nifty 500 38.4
Alpha over Category BM -14.1

Performance as of: 28-Feb-23 | Inception Date: 27-May-22

Fund Managers

Gaurav Arora | 2-star rated FM

Fund Manager | 14 yrs Experience | 2 yrs at current firm

Past Experience: VP (Avendus Capital), AVP (Kotak Institutional Equities), Assistant Manager (Tata Motors)

Gaurav comes with a decade of experience. Previously, he was the Vice President at Avendus Capital for 5 years (managing UHNI non-discretionary portfolios), prior to which he wasAssociate Vice President at Kotak Securities (Institutional Equities). Equirus is Gaurav’s first role as a fund manager, and he is yet to establish his fund management credentials.Gaurav is a graduate of IIM-C and BITS Pilani.

Fee Structure

Fee StructureFee
Fixed Fee Structure2.5
Variable Fee Structures
Exit Fees1yr(2%), 2yr(1%)

AMC

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

Highly recommended for aggressive investors looking for Small Cap focus: Equirus PMS has had a good start with a strong performance of its portfolio since its launch in 2016. Its focus on small-caps fits well with the group's strengths in small & midcaps on the broking side and the experience of their PMS fund manager Viraj Mehta. Equirius has the foundations to build a niche PMS business driven by the experience of the main fund manager, and the differentiation through a small-cap focus.

AMC Rating

4 of 5 stars

AMC Pedigree

4 of 5 stars

AMC Size

4 of 5 stars

Team Pedigree

4 of 5 stars

Inv Philosophy

4 of 5 stars

Performance

5 of 5 stars

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