Equirus Long Horizon Fund is credited with doubling investors’ money in the last twelve-month period, pushing the fund into the top-5 category of small-cap oriented PMS strategies. Let’s take a closer look at this strategy.
PMS philosophy
Equirus PMS investment philosophy is based on the synergies of value & quality. The approach compels the fund to invest in undiscovered business leaders with long term potential growth.
To be suitable for the portfolio, business must have some strong merits most relevant to long-term investing-qualities recognized over time by
investors and are selling it at a price below the intrinsic value.
At present, the fund has allocated 22.43% to Midcap while Small Cap has 73.97%. Cash portion is limited to 3.52%.
To know more, tune in to an exclusive webinar by Wealthzi on May 21st with Viraj Mehta, fund manager of this exciting PMS strategy. Register here.
Strategy specs
Fund size – over Rs 260 crore
Portfolio Manager – Viraj Mehta
Total Experience – 11 yrs
Mehta has been managing this portfolio since October 2016
The long-term oriented fund strategy does investment in stocks taking at least 24 months, but ideally 3-5 years perspective.
The approach is about managing market exposure if the market appears near any of the extremes: extremely under-valued, extremely over-valued. The exposure is primarily managed through changing cash levels in the portfolio.
The PMS strategy exits stocks when the security has achieved the objective in the portfolio or in its thesis is no longer working.
Performance
In the last 1 year period, Equirus Long Horizon has gained 118.20 per cent, out-performing category average of 91.20 per cent and BSE Smallcap index’s return of 95.19 per cent.
In the last 3-year period, the PMS strategy has delivered 19.48 per cent, again outperforming category average as well as BSE Smallcap index.
Not just PMS strategies, Equirus Long Horizon has beaten most of the smallcap mutual fund schemes such as Kotak Small Cap Fund, Nippon India Small Cap Fund, Canara Robeco Small Cap Fund, ICICI Prudential Small Cap Fund, Aditya Birla Sun Life Small Cap Fund, L&T Emerging Businesses Fund, Axis Small Cap Fund and SBI Small Cap Fund across 1- and 3-year periods.
Portfolio
A look at the top 5 holdings of Equirus Long Horizon shows that it has concentrated exposures to Polycab India Ltd 10.32%, Repco Home Finance Ltd. 8.00%, Thangamayil Jewellery Limited 7.70%, Oriental Aromatics Ltd 7.20% and Hikal Ltd 7.09%.
In terms of sectoral allocation, the PMS strategy is betting big on Chemicals 19.73%, Financials 15.03%, Pharma 12.60%, Consumer Durables 10.32% and Jewellery 7.70%.
Recently, Equirus Long Horizon added Birla Corporation stock. The fund manager expects utilization levels to increase as the infrastructure and construction activities pick up which will help in increasing realizations. Also, expect valuation re-rating once the capacity expansion is completed and deleveraging of the balance sheet.
Also, the PMS strategy has taken exposure to ISGEC Heavy Engineering. The fund manager expects strong operational performance in coming years due to ramp up of order book and revival in private capex cycle. Operating leverage benefits are expected to kick in once execution gathers pace which will lead to valuation re-rating.
The fund has exited Alkyl Amines Chemicals on account of historical peak margins along with highest valuation. While the PMS strategy thinks the company will continue to do well, it does not see favourable risk reward.
About fund manager
Viraj Mehta had been part of the award-winning fund management team at Franklin Templeton Investments managing an AUM of $6 billion. Viraj had also been the lead analyst for managing the small companies fund at Franklin Templeton Investments. He is a MBA from MDI, Gurgaon & Chemical Engineer from Nirma Institute of Technology, Ahmedabad.
Exclusive webinar by Wealthzi on May 21st with Viraj Mehta, fund manager, Equirus PMS. Register here.
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