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Nippon India PMS

Scheme Rating

IME Scheme Rating

3 of 5 stars

Concentrated Flexi-Cap Approach: The Strategy aim to invest in concentrated portfolio (20-25 stocks) accross market cap in high growth businesses that are existing leaders in their field of operations. The strategy prioritizes high-quality businesses that are corporate leaders (in their respective industry), leveraging their competitive advantages for a robust capital preservation stance and the potential for capital appreciation.

IME Strategy Rating

3 of 5 stars

Not a top recommendation due to being an AMC-driven PMS: Nippon India AMC PMS suffers from the common ailments of large AMC-driven PMS houses (PMS as an add-on instead of a clearly segregated business unit, churn in the investment team, a lack of skin in the game for the CIO and typically loosely defined investment philosophies). While the distribution strengths of the AMC can help the PMS scale and there are benefits of research access, most AMC driven PMS’s cannot compare to strong CIO-cum-founder driven PMS houses.

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 Nippon India PMS

Type: Absolute LS | Absolute Return LS | AUM ( cr) | Inc Date (10.2)

Investment Strategy

Key Characteristics of Strategy

  • Risk-Adjusted Returns: aims to deliver risk-adjusted returns across market conditions
  • Lower Volatility: measured as standard deviation compared to Nifty-50
  • Downside Protection: limit downside in adverse market conditions through derivatives
  • Investment Flexibility: a combination of strategies that help diversify the portfolio

How it Works in Different Market Conditions?

Up Market

Strategy may lag the market due to lower net exposure. Aims to be positively correlated in an up market.

Down Market

Aims to have lower drawdowns in a correction phase of the market due to lower net exposure. Manager may add value if short position declines more than the long basket.

Sideways Market

Expected to outperform the market in these phases as divergence of returns within the sector can be a potential source of alpha.

Portfolio Construction

  • Cash Market: invest in companies in the broad index. Sustainable business model, potential long term growth etc are the investment criteria.
  • Derivatives – Futures: take a directional position in equities based on the macro environment and market conditions
  • Derivatives – Options: write options, helps in directional and range bound markets¬†

LONG POSITION

  • Research-driven focus on macro and market indicators
  • Invest in companies that are part of the broad market index
  • Convergence between macro and market signals for taking net long or short exposure

SHORT POSITION

  • Weakening macro indicators
  • Stretched valuations
  • Deteriorating industry or business fundamentals, earnings trends.

RISK MANAGEMENT

  • Gross Exposure: max 200%
  • Long position in a single entity: max 10%
  • Short position in a single entity: max 10%
  • Liquidity Stress Test: days to liquidate the portfolio

Trailing Performance

2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Nippon High Conviction Equity 32.03 -0.6 24.3 22 21.8 -11.9 40 0.3 9.6
S&P BSE 500 TRI 26.6 4.8 30.3 18.3 9 -1.8 37.6 4.2 -0.1
Alpha (over Broad Mkt BM) 5.4 -5.4 -6 3.7 12.8 -10.1 2.4 -3.9 9.7
Nifty 500 25.8 1.6 31 17.7 8.6 -1.6 37.3 3.7 0
Alpha (over Category BM) 6.2 -2.2 -6.7 4.3 13.2 -10.3 2.7 -3.4 9.6

Fund Managers

Nippon High Conviction Equity

Can be considered for Investing: We prefer other Flexi-cap strategies, with more defined investment philosophies & consistency of performance. Can be considered for Investing: We prefer other Flexi-cap strategies, with more defined investment philosophies & consistency of performance. Concentrated Flexi-Cap Approach: The Strategy aim to invest in concentrated portfolio (20-25 stocks) accross market cap in high growth businesses that are existing leaders in their field of operations. The strategy prioritizes high-quality businesses that are corporate leaders (in their respective industry), leveraging their competitive advantages for a robust capital preservation stance and the potential for capital appreciation.Concentrated Flexi-Cap Approach: The Strategy aim to invest in concentrated portfolio (20-25 stocks) accross market cap in high growth businesses that are existing leaders in their field of operations. The strategy prioritizes high-quality businesses that are corporate leaders (in their respective industry), leveraging their competitive advantages for a robust capital preservation stance and the potential for capital appreciation.Not a top recommendation due to being an AMC-driven PMS: Nippon India AMC PMS suffers from the common ailments of large AMC-driven PMS houses (PMS as an add-on instead of a clearly segregated business unit, churn in the investment team, a lack of skin in the game for the CIO and typically loosely defined investment philosophies). While the distribution strengths of the AMC can help the PMS scale and there are benefits of research access, most AMC driven PMS's cannot compare to strong CIO-cum-founder driven PMS houses.Not a top recommendation due to being an AMC-driven PMS: Nippon India AMC PMS suffers from the common ailments of large AMC-driven PMS houses (PMS as an add-on instead of a clearly segregated business unit, churn in the investment team, a lack of skin in the game for the CIO and typically loosely defined investment philosophies). While the distribution strengths of the AMC can help the PMS scale and there are benefits of research access, most AMC driven PMS's cannot compare to strong CIO-cum-founder driven PMS houses.Proned to FM Churn: While Varun Goel has been with the PMS AMC since 2017, the risk of FM/Team churn remains a key concern as with all non-promoter driven investment teams..Proned to FM Churn:mWhile Varun Goel has been with the PMS AMC since 2017, the risk of FM/Team churn remains a key concern as with all non-promoter driven investment teams..Seasoned Fund: Funds with a 10+ year track record are highly seasoned, having witnessed multiple market cycles.Seasoned Fund: Funds with a 10+ year track record are highly seasoned, having witnessed multiple market cycles.Modest Performance: The performance of the strategy has been modest, with the strategy having outperformed it's benchmark in 5 out of the past 9 calendar years. Modest Performance: The performance of the strategy has been modest, with the strategy having outperformed it's benchmark in 5 out of the past 9 calendar years.

AMC

AMC: (click link for detailed AMC review)