December 2015

“Quality is never an accident; it is always the result of high intention, sincere effort, intelligent direction and skillful execution; it represents the wise choice of many alternatives.” - William A. Foster

Year 2015 was an eventful year for all asset markets. The steep fall in commodities and oil prices had a cascading effect and caused severe pressure on all the asset markets. The Indian stock market witnessed continuous selling in the second half of the year by FII’s (Foreign Institutional Investors). We witnessed sustained selling in some of the companies owned by us which was a real test of patience for us. Most of the corrections are temporary and will recover once FII buying resumes. In the middle of this pressure we delivered average 10% plus alpha in all our strategies.

It’s now six years in a row that we have outperformed the benchmark index (CNX 500) on calendar year basis. Most of it can be attributed to careful design of portfolio mandate and our strict adherence to it. We now offer four strategies with distinct portfolio mandates and have created a process to identify stocks and sectors which can fit into the respective mandates. Our intention from the beginning was to create sustainable wealth for our investors. The design of portfolios also ensured that we stayed away from short term trends and rather focused on longer term opportunities. This has also ensured that we avoid losing trades. In our observation, majority of losses happen due to herding. A few of our stock selection filters ensure that we stay away from such herd trades. We are committed to continue our good work, stick to the portfolio mandate and create wealth for our investors.

Calendar 2016 will open up opportunities for a lot of companies. Steep fall in commodities and oil has created conducive environment for industries. Cost pressure across sectors will come down and low commodity prices will boost consumption and production. In our opinion it will be an exciting year for equity investors as finally India is emerging out of STAGFLATION.

Regards,

Vinod Jain