💡 Rebalance: (v) to change the amount or level of one or more things in order to improve a particular situation
We launched our five thematic equity portfolios in October 2021. They are all based on unique themes that we believe in.
Since we launched, the markets have been volatile. Overall the Nifty 50 index from mid-October 2021 is down 3%, with major swings in the interim (a >15% range of movement).
Our performance in the meanwhile:
3 of our portfolios have been outperforming the Nifty, and
2 portfolios are under-performing compared to the Nifty
Going forward, we are committed to our goal of significantly beating the markets, and generating disproportionately higher returns for our investors in the long-term.
We’ve been seeing some positive signs already. Over the last month, here’s what performance on our portfolios looks like:
Bread & Butter: +7%
Value Migration: +10%
This against the Nifty, which is up 9% in the last month.
Changes in the portfolios
Bread & Butter
Why the changes?
Recent leadership flux has weighed on the stock
Consumption stocks haven’t been doing well in recent market conditions
Garware Technical Fibres
Raw material prices may come under pressure because of crude-linkage
Additional pressure from GST rate increases by the government on technical textiles
Cutting losses on the stock not performing well
The stock has performed very well: 3 month returns of 12% and 6 month returns of 27%
Lakshmi Machine Works
1 of 3 manufacturers globally to produce the entire range of spinning machinery
Has also expanded into CNC machine tools, precision castings and manufacturing aerospace components - all areas with high-growth potential
Has been growing revenue and profits in multiples
HDFC Life Insurance
Growth across all segments; especially ULIPs
Hiked prices by 15-25% in retail term insurance, and is likely to continue doing so
Leads the industry with product innovation, and maintains a balanced product mix
The Indian commercial vehicle space is expected to rebound after 2 bad years
Has industry-leading operating margins, negligible debt and superior return ratios
Poor performance in the December-ending quarter
Recent leadership flux
Ambiguity over a tax-law that was benefitting the company so far
Strong demand for grain-based ethanol
Praj will be a major beneficiary of the government's focus on ethanol blending
Strong order inflow, and order book
Why aren’t we changing anything in the other portfolios?
We had made a few changes in the Disruptors portfolio mid-quarter. We took advantage of the grave fall in the markets, and shot out an opportunistic rebalance. You can find more details on that here: https://www.rupeeting.com/post/disruptors-portfolio-rebalance
For Monopolies and Bread & Butter, we are happy with the current allocation. If we do think there is a need for rebalance mid-quarter or at the end of next quarter, we shall push one out. That said, we do monitor all our advise very closely on a daily basis.