Warren Buffett once said “We don’t have to be smarter than the rest. We have to be more disciplined than the rest.”
What worked in 2019 was disciplined investing across themes – be it large, mid or smallcap. Quality of portfolio and stock selection are the two most important things for wealth creation and PMS managers managed to just do that.
As many as 43 PMS schemes outperformed Nifty50 in 2019 delivering as much as 27 percent return, compared to 12 percent return for Nifty50 in the same period, according to data from PMSBazaar, an online portal used for PMS comparison, investment, and analytics.
The S&P BSE Sensex rose more than 14 percent while the S&P BSE Mid-cap, and the Small-cap indices closed the year on a negative note down 3 percent, and 7 percent, respectively.
Indian market hit fresh record highs in 2019 but only a handful of stocks led the rally. The broader markets underperformed Nifty for the second year in a row, and most of the stocks saw a sell-off.
However, quality small and midcaps stocks helped PMS Fund managers beat benchmark indices by a wide margin.
Portfolio Management Schemes (PMSes) cater to wealthy investors with portfolio sizes exceeding Rs 50 lakh. The professional fee charged by them is slightly higher than regular mutual funds (MFs).
PMS schemes run by leading portfolio managers and boutique wealth management firms managing money for the ultra-rich gave as much as 27 percent return in 2019 – this is almost double of what Nifty50 generated in the same period.
Data for PMS schemes for the period December 31, 2018, to December 31, 2019, highlighted that Marcellus Consistent Compounders, which is a Multicap theme, gave 27.4 percent in 2019,
Multi-Cap category funds are more diversified and include stocks from various market-cap baskets. A typical multi-cap portfolio comprises of stocks from largecap, midcap, and smallcap space.
Marcellus Consistent Compounders identifies firms with high pricing power that helps sustain a large gap between returns on the cost of equity and capital employed. The main objective of the scheme is to invest in a concentrated portfolio of heavily moated companies that can drive healthy earnings growth over long periods.
There are as many as 14 schemes that delivered returns in excess of 20 percent in the year 2019. IIFL Multicap PMS scheme generated a 27.25 percent return for ultra-rich in 2019, followed by Stallion Asset’s Core Fund.
In the large-cap space, the Sanctum Wealth scheme ‘Indian Olympics’ generated 23 percent returns maximum among the schemes in the large-cap space.
The India Olympics scheme is a large-cap-oriented strategy that focuses on investing in high-quality companies with long-term sustainable growth, driven by dominant leadership positions in their respective segments.
Emkay Investment Managers, Emkay Lead PMS which is a large and mid-cap category gave a 21.6 percent return in 2019. Emkay’s Large & Midcap scheme focus on achieving long term capital appreciation by predominantly investing in large, as well as high growth mid-cap companies with leadership trait in the sector along with strong moat.
The year 2020:
Most experts feel 2020 is likely to see a repeat of 2019, and investors could look forward to double-digit returns.
The theme which could work and hog limelight is ‘quality’ for the second year in a row. So, large and quality small & mid-caps could remain on buyers radar, say experts.
“We think that 2020 should be a better year for the markets as compared to 2019. Just looking at the Sensex numbers for 2019 is misleading as mid & small cap space has been under tremendous pressure in 2019 despite the Sensex doing well,” Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd told Moneycontrol.
“While a 13% kind of return on the Sensex is very much achievable for 2020 we believe that the mid and small cap space is much more attractive at this point of time. So while we expect the Sensex to do well in 2020 we believe that the mid & small cap would outperform the Sensex in 2020,” said Roy.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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