Kings of Capital
Our financials sector focused investment strategy with a portfolio banks, NBFCs, life and general insurers, asset managers and brokers.
Overview
Over the past decade, India’s Financial Services sector has been hammered by demonetisation, the ILFS crisis, Yes Bank’s collapse and now the Covid crisis putting extreme pressure on weak lenders. However, history shows that investing in high quality financial stocks during a crisis proves to be highly rewarding. The key objective of our “Kings of Capital” strategy is to own a portfolio of 10 to 14 high quality Financial companies (banks, NBFCs, life insurers, general insurers, asset managers, brokers) that have good corporate governance, prudent capital allocation and high barriers to entry.
Portfolio Construction
The three tenets for selecting stocks in Kings of Capital remain the same as in our previous two strategies – Consistent Compounders and Little Champs:
- 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.
Given the inherently leveraged business models of financial services companies, the importance of each of these traits is further amplified and therefore we believe we can put our skills around forensic accounting and understanding barriers to entry to good use to create a portfolio of high quality financial services stocks. Keeping this in mind, we have created a portfolio of high-quality lenders, general insurers, life insurers, asset managers and brokers. We believe there is a massive opportunity for the banks and NBFCs in the Kings of Capital portfolio to consolidate market share as these are well run lenders with adequate capital to not only absorb NPAs but also grow post the crisis. As per RBI’s households survey, 95% of Indian wealth is in physical assets with only 5% being in financial assets. The non-lenders (insurers, asset managers and brokers) in the Kings of Capital portfolio therefore have a large structural opportunity to benefit from the financialization of Indian household savings.
Fee Structure
Marcellus offers Kings of Capital PMS with ZERO entry load/exit load and with no lock-in. We offer two fee structures:
| Regular Plan | Direct Plan | |||||
|---|---|---|---|---|---|---|
| Fixes | Variable | Hurdle | Fixes | Variable | Hurdle | |
| Fixed only | 2.50% | 0% | NA | 2% | 0% | NA |
| Variable only | NA | NA | NA | NA | NA | NA |
| Hybrid | 1.50% | 15% | 10% | 1.25% | 15% | 10% |
* High water mark applies for performance fees Minimum investment: INR 50 lac
PERFORMANCE
Performance as on 30th November 2024 (figures in %)
*For relative performance of particular Investment Approach to other Portfolio Managers within the selected strategy, please refer https://www.apmiindia.org/apmi/WSIAConsolidateReport.htm?action=showReportMenu. Under PMS Provider Name please select Marcellus Investment Managers Private Limited and select your Investment Approach Name for viewing the stated disclosure. Performance data shown is net of fixed fees and expenses charged till September 30th, 2024 and is net of annual performance fees (Except for Little Champs Portfolio) charged for client accounts whose account anniversary/performance calculation date falls upto the last date of this performance period. Since, for Little Champs Portfolio, performances fees are charged on cumulative gains at the third anniversary, of the respective client account, the effect of the same has been incorporated for client accounts whose third account anniversary falls upto the last date of this performance period. Performance data is not verified either by Securities and Exchange Board of India or U.S. Securities and Exchange Commission.
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