Alchemy PMS CAGRAlchemy Capital Management runs one of the biggest multi cap PMS strategies in India. It is called Alchemy High Growth. An estimated Rs 2,600 crore investor money is in that PMS strategy. Alchemy has a rich founding history, as it was started by Lashit Sanghvi, Hiren Ved, Ashwin Kedia, and Rakesh Jhunjhunwala.

Today, RupeeIQ is going to have an up, close and personal look at Alchemy High Growth, which aims to make money by identifying high-quality growth in publicly listed stocks that can deliver superior risk-adjusted returns.

This multi cap strategy is a big hit among PMS investors, purely because of the phenomenal track-record. Sample this: an initial investment of Rs 1 crore way back in 2002 would have today grown to more than Rs 37 crore. If you had invested the same money in S&P BSE 500, it would have fetched about Rs 13 crore.

The Strategy

The strategy revolves around a typical portfolio consisting of 20-25 stocks; a minimum of 25% exposure is in large-caps, less than 20% is in small-caps, and the balance for mid-caps. This, Alchemy contends, gives it enough flexibility to position the portfolio based on external opportunities and maintaining fair risk-reward.

Do note that Alchemy High Growth is different from Alchemy High Growth- Select Stock that invests in high conviction concentrated stocks – around 8 to 12 stocks — across sectors, with a focus on mid-cap companies.

Alchemy High Growth benchmark – S&P BSE 500

Suggested time horizon – 3 to 5 years

Alchemy High Growth fund style – Multi-cap growth

Alchemy High Growth strategy bias – Mid caps. As on May 31, 2019, however, the strategy kept 45% in large caps, 40% in midcaps and 15% in cash equivalents.

Alchemy High Growth launch date – 8th May, 2002

Minimum investment – Rs 50 lakh

Fund Manager – Amit Nadekar. He has been a part of the Alchemy investment team since 2005. Amit has over 16 years of experience. He reports to CIO Hiren Ved.

Alchemy High Growth May 2019 portfolio includes stocks like Bajaj Finserv, Sundaram Fasteners, Bajaj Finance, HDFC Bank, and so on. Financials have over 26% weight in the portfolio. The biggest weight is in consumer related sectors at over 38%.

Alchemy High Growth out-performance – Alchemy High Growth is the flagship strategy of Alchemy India. It has has been managed through bull and bear cycles and out-performed its benchmark 14 out of 17 calendar years.

PMS house vintage – Alchemy is one of the few portfolio managers in India to have been in existence since 2002. It has 17 years of investment management record. It manages/advices over $1.10 billion of assets onshore and offshore as on 31st May 2019. The PMS company is known for its emphasis on compliance and risk management, with an ethical code of conduct in place and is known to be transparent when it comes to business, client service and reporting.

Fees – Alchemy does not share its fees details with the general public in terms of a freely available disclosure document. However, we gather that it offers a fixed fee model and in addition offers a performance fee plan. The PMS house charges 15% of return above an annualised return of 10% (hurdle rate), at the end of every year starting from the date of client agreement.

Alchemy high growth

RupeeIQ take

We compared the returns of publicly available multi cap strategies specifically with Alchemy High Growth strategy. We ignored 1 and 2 year returns (as on April 30, 2019). What we broadly found out that on a 5 year basis, the Alchemy High Growth strategy comfortably beats most comparable strategies like Accuracap (Alphagen), Alfaccurate (AA India Opp.), Centrum (Wealth Creator), Reliance (High Conviction). The Alfaccurate strategy, however, did beat Alchemy on a 3-year basis.

We found that on risk parameter basis ie. standard deviation, sharpe ratio and beta, Alchemy High Growth strategy has done better than its benchmark when you look at ‘since inception’ time period. This is a high risk-high return portfolio.

As an investor, you can draw comfort from the market standing of Alchemy, and its Extensive network of intelligence and information. There is not too much to dislike. Its long term approach and commitment to investing in listed companies with continuous review is a good example of aligning PMS firm and investor interests. Its consistent performance track record makes this strategy a good one to have if you are serious about PMS investing.

Disclaimer: The article is only for informational purposes. Investors are requested to consult their financial, tax and other advisors before taking any investment decision.

Author
Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. He can be contacted on contact@rupeeiq.com