IIFL PMS - Portfolio Management Services in india
IIFL PMS is one of the best portfolios of the last 3 years. This speaks a lot about the robustness of the investment philosophy as the last 3 years have been a tough period for markets. IIFL PMS follows a very intuitive framework of first dissecting the listed equity market on the basis of corporate earnings. IIFL calls this structure as SCDV framework, whereby S stands for Seculars Companies, the ones that witness PAT and ROE growth of more than 15% year on year. C stands for Cyclical Companies, the ones that witness the PAT more than 15%, and ROE less than 15%. D stands for Defensive companies, the ones which witness PAT less than 15%, and ROE more than 15%. And, finally, the Value Traps, the ones which have both PAT and ROE less than 15%. For investors chasing low risk – low return, seculars is the most ideal basket. It comprises of names like HDFC, Kotak, Bajaj, Asian Paints, etc. But, if the idea is to strive for more, one needs to discover “those Outliers” in cyclical, defensives and value traps which show a tendency of moving to seculars. This is where big alpha is made. IIFL Multi-Cap PMS follows a Core and Tactical Allocation whereby 40% portfolio sits in Secular basket which becomes “Core” of the portfolio and the remaining 50-60% is Tactical allocation between Cyclicals, Defensives and some amount to Value Traps. The core portfolio provides stability and tactical Portfolio Management Services are where alpha is sought. The belief largely is that companies that are not in the secular basket today will not always remain like that. There will be some outliers that over time will make a move to the secular basket in line with the improvement of their earnings profile. SCDV seeks to look out for these outliers in Cyclicals, Defensives and Value Traps.
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