Porinju Veliyath's Equity Intelligence PMS returns 9.41% in FY 17-18Porinju Veliyath’s Equity Intelligence PMS has reported a return of 9.41% in 2017-18 financial year as compared to 10.25% of the benchmark Nifty 50 during the same period. Even though the performance has been muted, Veliyath has almost doubled his investor base to 2,150 and assets under management to Rs 1,570 crore as of 31 March 2018. 

Veliyath, a popular figure in the investment world, launched his PMS in 2003 and has delivered a stellar 32.27% CAGR over the next 15 years. He has also amassed a huge fan on social media and his holdings and performance are widely tracked by Indian investors. You can read our comprehensive review of the Equity Intelligence (EQ) PMS here.

A PMS or Portfolio Management Service manages a stock portfolio on behalf of investors. PMS is different from a mutual fund as the latter pools money from several investors and issues units in lieu of its assets. These units have a Net Asset Value or NAV which is declared on each business day. A PMS does not pool your money with other people’s, it holds your money in separate accounts. It also does not issue any units. You need at least Rs 25 lakh to invest in a PMS, while you can invest in a mutual fund for as little as Rs 500.  

Here is how Porinju’s Equity Intelligence PMS has performed over the years.

(Note: Our analysis indicates that EQ compares itself to the Nifty Price Index rather than the Nifty Total Return Index (TRI), which may cause the Nifty returns to be understated. Mutual Funds in India are obligated to use total return indices as benchmarks by SEBI rules. A Total Return Index counts both dividends as well as price growth in the benchmark return.)

Year FY 2017-18 FY 2016-17 FY 2015-16 2003 – 2018
EQ PMS Return 9.41% 46.98% 11.42% 32.37%
Nifty Return 10.25% 18.56% -8.85% 16.64%

As of 31st March 2018, Source: Equity Intelligence

Returns on a trailing basis are as follows:

Time Period 3 years 5 years 15 years
EQ PMS Return 20.15% 27.5% 32.37%
Nifty Return 6.00% 12.21% 16.83%

As of 31st March 2018, Source: Equity Intelligence

The drop in performance in FY 2017-18 is likely to have accelerated in FY 2018-19. In a letter to investors sent in September 2018, Veliyath noted, “This phase has been particularly challenging for the kind of stocks we tend to build portfolios from…We encourage investors to see the current underperformance in the light of strong outperformance in the previous few years. As we have learnt over the years, everything is cyclical including portfolio performance.” You can read more about Porinju’s letter here.

Despite its relatively muted performance the Equity Intelligence PMS almost doubled its assets under management (AUM) over the past year and added 952 new investors.

Date No of clients AUM (Rs crore)
On 31st March 2017 1,198 816.6
On 31st March 2018 2,150 1,574.1

Source: EQ disclosure to SEBI on 29-05-2018

In addition to the EQ PMS, Veliyath’s team has also launched the EQ India Fund, a Category III AIF (Alternate Investment Fund) in July 2017. This type of fund can take on leverage (debt) to generate returns and in essence acts as a hedge fund. It has a minimum ticket size of Rs 1 crore. Returns data for this AIF is not yet available.

RupeeIQ Take

After many years of scorching outperformance, EQ PMS has shown decline in returns mainly because of the massive correction in small and midcap stocks in the last one year. Veliyath, who is known as India’s Warren Buffett, has a value investment strategy, and small and mid cap stocks have been a focus for the PMS manager. These stocks suffered the most during the recent correction. The severity and the extent of the impact of the correction on the PMS will only be apparent once the numbers for FY 18-19 are released. However, Veliyath’s long term track record is impressive, as the data has shown. 

Staff Writer

This article is written by RupeeIQ editorial staff.