Marcellus Kings of Capital
Marcellus PMS | Equity | | PMSIME's View on Marcellus Kings of Capital
Strategy
Investment Fund
We typically do not recommend Thematic funds to investors, since it requires getting in and out of the theme at the right time. Typically a strong contra approach (investing in themes when they are out of favour, and getting out when they are popular) leads to better performance, but this is very hard to actually implement in practice given strong behavioural instincts against such an approach (investors often end up entering themes post a run-up, which can often be the worst time to invest). In our view, thematic funds are primarily suitable for more astute investors who have a deep underlying understanding of the investment merits of the theme.
Fund's Strategy View
It is a concentrated approach (10-15 companies) with Laser-focused on the Financial Sector on the back of a very strong rationale for the same. Marcellus's strong focus on clean accounting, corporate governance, capital allocation, and barriers to entry help mitigate many of the normal risks while investing in the finance sector, which makes this an interesting investment option for investors willing to take on a higher level of risk.
Fund Performance
The fund has underperformed peers & is amongst the worst performing schemes in this category in the last 5 year trailing returns.
IME's View on Marcellus PMS
View on AMC
Marcellus offers strong investment options for those interested in high quality companies, but their lack of flexibility in investment approach hinders performance across market conditions. Recent weak performance and limited portfolio repositioning capabilities contribute to lower ratings for the seasoned investment team.
AMC's Pedigree
Marcellus, a respected PMS house, was founded by the core team behind Ambit's investment business. They have a strong focus on investing in high-quality franchises. While Marcellus got off to a very strong start, their very aggressive focus on their investment philosophy on high-quality franchises (even willing to ignore valuations) has limited their ability to reposition portfolios as the market cycle turned leading to very sharp underperformance which has adversely impacted their reputation in recent times.
AMC Team
Marcellus has a strong investment management team led by highly experienced professionals Saurabh and Rakshit, who possess strong track records and research credentials. The team's longevity and leadership as founders ensure stability in their philosophy and practices.
Investment Philosophy
Marcellus prioritizes investing in top-quality businesses with strong management and transparent accounting practices, following this philosophy consistently across all their strategies. While the philosophy has very clear merit, the issue can be that this is followed very rigorously, which does reduce the flexibility that the fund manager has to reposition the portfolio during economic upcycles & strong bull markets - where many sectors & companies with lower quality scores may be driving performance.
Investment Strategy
Key objective of “Kings of Capital” strategy is to own a portfolio of 10-14 high-quality Financial companies that have good corporate governance, prudent capital allocation and high barriers to entry.
Portfolio Construction
King of Capital Portfolio will span the entire financial services sector:
- Lenders: long track record of prudent credit underwriting, smart capital allocation and good corporate governance
- Life Insurers: large distribution footprint, customer-centric product innovation and an effective actuarial risk management framework
- General Insurers: focus on long term profitability and return on equity and a track record of conservative underwriting across cycles
- Asset Managers/brokers: moated business models and strong pricing power
Investment Philosophy
The three tenets of Kings of Capital remain the same:
- Clean accounting and good corporate governance;
- Historical evidence of prudent capital allocation; and
- High barriers to entry so that companies are able to sustainably generate return on capital higher than cost of capital.
INVESTMENT PROCESS
- Universe: 95 financial companies in the universe
- Forensic Accounting Screen: eliminating companies with sub-par accounting to get to 65 companies
- Use Proprietary Capital Allocation Models: detailed analysis of annual reports and published financials to get to 23 companies
- Channel checks and Management Meetings: with the remaining 23 companies
Trailing Performance
| 1yr | 3yr | 5yr | Since Inception | |
|---|---|---|---|---|
| Marcellus Kings of Capital | -1 | 11 | 12.4 | 10.8 |
| S&P BSE 500 | -6.6 | 14.7 | 19.2 | 18 |
| Alpha over Broad Mkt BM | 5.6 | -3.7 | -6.8 | -7.2 |
Performance as of: 30-Sep-25 | Inception Date: 28-Jul-20 | Performance are post-fees, pre-taxes. Global funds denominated in USD or fund currency.
Investment team
Rakshit Ranjan | 4-star rated FM
Fund Manager | 21 yrs Experience | 7 yrs at current firm
Past Experience: Ambit Capital (FM), Lloyds Banking (Director Research), Noble & Co (Analyst)
Rakshit has a strong investment management track record, having launched Ambit's Coffee-Can PMS in Mar-17, which he ran till Dec-18. The Coffee-Can PMS was one of the best-performing PMS schemes in 2018. Prior to setting up the Coffee-Can PMS, Rakshit was the lead consumer analyst at Ambit. His earlier experience was in UK equities at the Lloyds & Noble groups.
Saurabh Mukherjea | 5-star rated FM
Founder & CIO | 28 yrs Experience | 7 yrs at current firm
Past Experience: Ambit Capital (CEO), Noble (Head of India Equities), Accenture (Consultant), London Economics (Consultant)
Saurabh comes with a very strong investments background, having helped build Ambit's broking, wealth & investment management businesses as CEO. He was also responsible for building Execution Nobles India broking business (which was sold to Ambit) and having set up and sold Clear Capital (a UK based small cap research fund). Saurabh is a strong believer in investing in the long-term in very high quality clean businesses and has written a number of books including Gurus of Chaos, The Unusual Billionaires and Coffee Can Investing.
Ashvin Shetty | 3-star rated FM
Portfolio Manager | 22 yrs Experience | 7 yrs at current firm
Past Experience: Analyst (Ambit), Analyst (Execution Noble), Statutory Auditor (KPMG)
Ashvin Shetty has more than a decade of experience in equity research. Previously, at Ambit, he led the coverage on automobile sector from 2010 to 2017. Ashvin was recognised multiple times for his stock picking abilities. He was ranked in Starmine Analyst Awards 2013 and 2016 as a lead auto analyst. He later moved onto become a senior analyst for Ambit's Mid and Small cap PMS funds till November 2018. Prior to joining Ambit, he worked with Execution Noble as an analyst covering consumer and media space. He has also worked with KPMG's and Deloitte's statutory audit departments from 2004 to 2007 gaining extensive experience across Indian accounting standards and financial statement analysis. Ashvin is a BCom graduate from Narsee Monjee College (Mumbai). He is a qualified Chartered Accountant (ICAI India) and Chartered Financial Analyst (CFA Institute, USA).
