The minimum ticket size applicable at the time of opening a new account, is the same as regulatory minimum of Rs. 50 lakhs.
Yes. For investment in listed securities, an investor is required to open a new demat account in his/her own name.
A Portfolio Management Service is a platform created especially for high net-worth individuals to provide customized solutions for their financial investment needs. Investment management solutions in a PMS can be provided in three ways – Discretionary Portfolio, Non-Discretionary Portfolio, Advisory Portfolio.
Portfolio Management Services are regulated by Securities and Exchange Board of India (SEBI) under PMS Regulations.
The filter-based portfolios described in these books build annual portfolio iterations using preceding decade’s fundamentals and filtering out companies which have delivered double digit revenue growth and returns on capital greater than cost of capital, each year for 10 years in a row. This filter based portfolio once left untouched for a decade, has historically delivered an average CAGR of ~25% with the volatility in this return similar to that of a Government Bond.
The Consistent Compounders Portfolio combines our deep-dive stock-specific research with the benefits of the filter-based approach explained earlier, and thereby attempts to outperform vs these filter-based portfolios. This is achieved via 3 factors:
Portfolio concentration: The filters might give a longer list of stock which dilutes the reliance of the portfolio on outstanding companies. We narrow the portfolio down to 12-15 ultra-high quality stocks. So, how do we do that?
Ignorable consistency in historical fundamentals: Eg. Many housing finance companies which form part of the filter-based portfolios, are examples of 10 years of consistent fundamentals delivered due to unsustainable macro tailwinds for the Housing Finance Companies from low cost money market funding and a booming real estate market in the country – neither of which to our mind is sustainable.
Excusable blips in historical fundamentals are forgiven: For example, Nestle’s Maggi episode ensured that revenue growth of Nestle India dropped below 10% in FY15. Similarly, the fall in crude oil prices to below US$30 per barrel caused a 6% product price cut by Asian Paints in FY17 which led to its revenue growth dropping below 10% YoY in FY17. Manual intervention in portfolio construction analyses the nature of these blips and might include such stocks in the portfolio.
The portfolio is agnostic to parameters like market cap, sectors etc. However, given the nature of the philosophy, most constituents of the Consistent Compounders portfolio are large and liquid stocks of cash generative companies, typically in the consumption and financial services sectors.
Marcellus’ Consistent Compounders PMS defines its coverage universe based on a historical track record of consistent and healthy revenue growth and ROCE (returns on capital employed). The number of stocks in the coverage universe is around 30. Within the coverage universe, our research approach includes digging deep into understanding the DNA of these companies which helped them deliver the historical consistency. Based on such understanding of the DNA, we buy 10-15 stocks in our model portfolio of the PMS, where we have a high degree of conviction on the company’s ability to continue delivering healthy earnings CAGR over the next decade or longer, regardless of disruptive and evolutionary changes in the interim.