A.K. Wealth Debt PMS

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A.K. Wealth Debt PMS

Mr. A. K. Mittal founded the A.K. Group to run and develop the still-developing Indian debt capital markets. The Group has impacted the investment banking industry by creating new investor and issuer sectors, thriving national secondary markets for corporate bonds, and innovative new debt financing products. The group’s declared objective is to “place a bond in every hand.”

About AK Group

By successfully forecasting future market trends and providing clients with specialized service options, the Group has become a leader in private placement and public issuance of fixed-income instruments. The company’s consistent commitment to reliability and transparency has earned it a position as an industry leader in fixed income. 

In terms of debt mobilization, the Group has a top position. It has provided services to some of the country’s most illustrious private corporations, nationalized banks, and banks in both the public and private sectors. More than 200 satisfied customers use it. The Group has consistently lauded its unshakable dedication to offering precise and trustworthy guidance. The Group’s in-depth understanding of the topic, ability to put ideas into practice, honesty, and dedication have allowed it to carve out a leading position in a brutally competitive debt market segment.

The Group’s highly skilled and experienced employees put forth endless effort to provide each and every client with great services. Their approach is to focus on the requirements of each customer and go above and beyond to keep promises. By providing applicable services, such as investment banking, structured finance, project financing, bonds, and related research, to name a few, they are ready for both present and future possibilities thanks to their accurate market prediction.

The A.K. Group has always placed accuracy above choice as one of its basic values. With decades of experience, the organization has developed a strong knack for understanding the consumer’s financial needs and investment concerns. A.K. Group constantly ranks at the top of every client’s list due to its effectiveness.

Investment Objective

There is an available discretionary PMS that will invest in fixed-income assets. In the PMS, they seek to:

  • Your whole investment is in debt.
  • Provide a steady and reliable income
  • Manage portfolios actively by combining trading and investment strategies.
Product Offering
  • An offered PMS will invest in fixed-income securities.
  • The securities will have ratings ranging from AAA to A-.
  • The strategy will mix a hold-to-maturity and a trading approach depending on the market conditions and the availability of arbitrage opportunities. The portfolio can be changed to accommodate investors’ requests for bigger investments. 
  • They aim for returns between 9% and 10%, depending on the strategy.
  • The ideal investment horizon is two to three years.
  • Option to register without using a distribution service provider.
Product Rationale

PPFs, debt mutual funds, and bank FDs are only a few investment alternatives available in the current fixed-income market. Each of these choices has advantages and disadvantages. For instance, bank FDs have lower returns despite the capital being insured. Mutual funds receive a tax benefit after three years of investment. Dynamically managing the methodology (time vs. credit) is not possible.

The PMS is an addition to the many investing options. The objective is to provide stable and consistent income through interest income. Periodically, AK Wealth will seize tactical opportunities to generate capital gains in addition to interest income.

Who Can Invest?

Investors interested in earning a reliable income while maintaining their wealth may want to think about this product. This is the best choice for investors who want to maintain a fixed-income portfolio and have a low to moderate risk tolerance as well as a moderate to big spread of returns over comparable-term government debt.

Investment Strategy

The Fund Manager will use a Core-Satellite approach to manage the portfolio.

CORE PORTFOLIO

  • Strategy: By employing a value-based investing approach with Their chosen Issuers, AK Wealth believes AK Wealth can pursue the best risk/reward trade-off throughout the credit spectrum. 
  • Indicative Investment Horizon: 2 – 3 Years
  • Objective: Securing your Portfolio YTM will allow you to increase gains consistently.
  • Liquidity: Generally little traded and illiquid fixed-income instruments

SATELLITE PORTFOLIO

  • Strategy: A method that is actively managed and will make opportunistic investments in ineffective circumstances
  • Indicative Investment Horizon: 3 – 6 Months 
  • Objective: Give excessive returns over the locked-in YTM.
  • Liquidity: Liquid and Traded Fixed Income Securities

About Fund Managers

Aditi Mittal 

Aditi Mittal

Ms. Aditi Mittal is a director for the A.K. Group and a chartered accountant. Aditi has worked with the A.K. Group for almost ten years. Her motivation and goal are focused only on accelerating A. K. Group’s expansion, so that debt markets are open to and accessible to every Indian. Aditi is also a Director at the father-founded financial services company AK Group. She began working for the company when she was still in her late teens and has played a key role in directing the company’s growth plan for the past ten years.

With investments for their own NBFC, national retail bond distribution, brokerage, investment banking, capital markets origination, and foreign finance among its businesses, AK Group is currently a major bond underwriter in India. At A.K. Group, Aditi has been building, leading, and motivating teams to create strategies both domestically and internationally to realize the Group’s aim of establishing a liquid, open, and thriving domestic corporate bond market.

Portfolio Strategies

Credit Alpha

Depending on the situation of the markets and the fund manager’s viewpoint, a model portfolio will be created that will seek a target yield and tenor. Credit Alpha will make investments in the model portfolio. The approach may be dynamically managed at the portfolio manager’s discretion.

Current Strategy:

  • Playing the credit game, given the lucrative rates offered on lower-rated corporate bonds.
  • Purchase a portfolio of securities with ratings ranging from AAA to A- and a combined rating of A+/A.
  • Target Portfolio YTM** of 9% – 10%
  • Look for arbitrage opportunities to generate returns that are higher than the desired YTM
  • Target outstanding portfolio maturity of two to four years
  • AK Wealth could anticipate liquidity before maturity for some longer-term securities.

Portfolio Terms

Portfolio Manager: A.K. Wealth Management Private Limited

Investment Objective :

To provide consistent and reliable returns, invest in debt and money market instruments throughout the credit curve.

Type of Securities :

Bonds, debt obligations, money market instruments, and other fixed-income securities with credit ratings between AAA and A- (aiming for a blended portfolio rating of A+/A)

Basis of Selection :

Securities are chosen based on the portfolio manager’s opinions.

Allocation of Portfolio across types of securities :

100% is invested in debt and money market securities.

Benchmark :

The strategy invests throughout the credit spectrum using the CRISIL Composite Credit Risk Index.

Risk Associated :

Some of the dangers involved in investing include liquidity risk, settlement risk, default risk, interest rate risk, and reinvestment risk.

Minimum Investment Amount :

50 lakh rupees and multiples of 5 lakh rupees

Distributions / Pay-outs :

The PMS will distribute the realized interest and dividend income as and when received; the majority of securities will have semi-annual or annual payouts.

Fund Accountant & Custodian :

Orbis Financial Corporation Limited

Management Fee :

1.50% per annum charged quarterly

Target Gross Yield :

9% to 10% 

Portfolio Yield to Maturity :

9.25 to 11.26%

Credit Quality :

With an average portfolio quality in the AA- to A+ range for individual investors, PMS has invested in securities graded AAA to A-.

Outstanding Maturity of Portfolios :

1.06 to 3.30 years

Number of Securities :

While individual investors own a range of 4 to 15 stocks; the total PMS holding is 30.

Portfolio Strategy

A.K. Wealth Management Private Limited offers a fixed-income portfolio strategy that invests in a pool of rated securities to generate attractive risk-adjusted returns compared to the conventional debt investment opportunities available today, focusing on capital preservation.

Portfolio Statistics As on 31-Aug-2022

An amalgam of several investor portfolios makes up Credit Alpha. AK Wealth have included a list of the range of distinct portfolio criteria for various investor portfolios. Depending on a number of variables, including the timing of the investment, the availability of securities, market movements, etc., an investor’s portfolio holdings may vary.

Portfolio Yield to Maturity

It is based on the total cash flow generated by all of the assets held in the portfolio as of August 31, 2022. This yield, which is based on the purchase prices of all assets, shows the yield that was locked in for each portfolio when it was built at the time of activation. Since a portion of the portfolio may be actively managed to take advantage of arbitrage and tactical opportunities in the fixed-income market, portfolio YTMs may alter. Such tactical decisions can provide capital gains above and above the Portfolio YTM, boosting the returns on the entire portfolio.

Portfolio XIRR Since Inception

This is the real XIRR for all portfolios combined by Credit Alpha (calculated as the XIRR of all portfolio’s cash flows). The date of creation was 8 February 2019. For the period of 8th February 2019 to 31st August 2022, XIRR returns are computed. The XIRR results are both fee and tax-free.

Time Weighted Rate of Return

If necessary, the portfolio’s 1-year TWRR is 7.87% after deducting fees and expenditures.

Portfolio Average Credit Rating

Calculated as the portfolio’s weighted average credit rating for the securities it holds. Each portfolio has a mix of securities with ratings ranging from “AAA” to “A-.” 

Portfolio Average Maturity

calculated using the portfolio’s weighted average maturity of the securities owned. Securities having a shorter maturity (1–4 years) are often purchased with the intention of holding them until they mature. This serves as the main source of accrual revenue for the portfolio. In order to take tactical positions in the fixed-income market, longer-tenor (> 4 years) assets are purchased from an active management perspective.

Credit Ease

The Fund Manager will be aware of the investor’s requirements with regard to the targeted yield, the time horizon for investing, risk tolerance, regular income, etc., and will build a portfolio based on these factors.

Portfolio Construction

Understand Client Needs :

Recognize the client’s preferred credit grade, investment horizon, and expected return

Recommend Strategy :

AK Wealth develop the portfolio based on the needs of the clients and AK Wealth’s vision.

Execute & Monitor Portfolio :

As soon as the investments are made per the suggested portfolio, AK Wealth will continue to monitor them regularly.

Portfolio Characteristics

Credit Universe :

AAA to A- (portfolio will be customized to suit investor needs)

Target Yield :

It depends on the investor’s willingness for risk and the mix of the portfolio

Diversification :

1.There will be 8–10 stocks in the portfolio. However, it depends on the size of the portfolio and the face value of the assets that will be purchased.
2.Occasionally taking advantage of trading opportunities, up to 25% of the portfolio’s allocation may be allocated to liquid securities.

Tenor :

Depending on the needs of the investors, the strategy can be either short- or long-term.

Trading Opportunities :

In order to increase returns, make an effort to identify and seize arbitrage possibilities in the debt capital market.

Portfolio Manager :

A.K. Wealth Management Private Limited

Investment Objective :

To provide consistent and reliable returns, invest in debt and money market instruments throughout the credit curve.

Type of Securities :

Bonds, debt instruments, money market securities, and other comparable fixed-income securities with credit ratings of AAA to A 

Basis of Selection :

Securities are chosen based on the portfolio manager’s opinions.

Allocation of Portfolio across types of securities :

100% is invested in debt and money market securities.

Benchmark :

Because the approach invests throughout the credit range, CRISIL AA Medium Term Bond Index.

Investment Horizon :

24 months – 36 months
Risk Associated :

Some of the dangers involved in investing include liquidity risk, settlement risk, default risk, interest rate risk, and reinvestment risk.
Minimum Investment Amount :

INR 5 Crs
Distributions / Pay-outs :

The PMS will distribute the realized interest and dividend income as and when received; the majority of securities will have semi-annual or annual payouts.
Fund Accountant & Custodian :

Orbis Financial Corporation Limited

Exit Fee :

2% is due on redemption profits within a year, and 1% is due after two years.

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Disclaimer: Investing Involves Risk. This document is for information purposes only and should not be viewed as a legal offering document or solicitation. Offers to invest in this fund are made only by the Discretionary Portfolio Management Services Agreement. Past performance does not guarantee future results and there is no assurance that the managed accounts will necessarily achieve their objectives. We do not guarantee any returns in the hand of investors not we take any sort of accountability for the performance of the scheme. The above-mentioned data is collected from the respected Fund house please verify the same at SEBI website.