Alchemy India Long Term Fund

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ABOUT ALCHEMY

Alchemy Capital Management, established in 1999, is one of the leading providers of bespoke Portfolio Management Services in India. The SEBI-Registered firm caters to high-net-worth individuals, family offices and institutions. Pioneers in bottom-up stock picking approach, Alchemy places a strong emphasis on research and long-term investments. Guided by a disciplined investment approach, the company aims to deliver sustainable returns. With a legacy of over 20 years, Alchemy has built a reputation for trust, integrity, and expertise. Its stable and experienced team of investment professionals possesses deep industry knowledge, enabling the firm to adeptly navigate market cycles and trends.

Fund Snapshot

Subscriptions Monthly
Fund Type International Fund
Minimum Investment: Series A Units : USD 150,000 to less than USD 300,000 / Series B Units : USD 300,000 to less than USD 500,000 / Series C Units : More than USD 500,000
Performance Fee 15% with high watermark; charged at the end of each financial year or at the time of redemption, whichever is earlier
Hurdle Rate 6% p.a. (USD)
Management Fee Series A Units : 1.50% p.a. charged monthly in arrears / Series B Units : 1.25% p.a. charged monthly in arrears / Series C Units : 1.00% p.a. charged monthly in arrears
Redemptions Monthly with prior notice of 15 calendar days with exit load
Exit loads 0–12 Months: 1.5% / 12–24 Months: 0.75% / >24 Months: 0%
Administrator ASCENT Fund Services (India) Pvt. Ltd, India
Trustee Amicorp Trustees (India) Private Limited (Branch)
Custodian Kotak Mahindra Bank Ltd, India
Number Of Positions Concentrated portfolio of approximately 20-40 different positions
Sizing Starting weight up to 5%, scaled over time
Stock Exposure Max 15% of the portfolio
Sector Exposure Max 40% of the portfolio
Holding Period Generally two years1 plus
Currency Exposure U.S. dollars

FOCUSED, BOTTOM-UP STRATEGY

Alchemy focuses on bottom-up stock picking based on primary research using a disciplined process. The team takes long-term concentrated positions with the objective of generating long-term absolute returns on investors’ capital.

EXPERIENCED MANAGEMENT

Alchemy is led by experienced investment professionals, whose experience spans several market cycles of investing in the Indian equity markets. This long-tenured team possesses extensive networks of intelligence and relationships that are critical when evaluating companies and identifying trends at the ground level. 

RIGOROUS RISK MANAGEMENT

Alchemy has a robust infrastructure that enables rigorous risk management based on continuous review of contributors to – and detractors from – performance to ensure the soundness and integrity of the firm’s investment thesis. A regular review by Alchemy India’s (advisor to Alchemy GIFT LLP) Investment Committee brings sanctity to the investment process.

THE ALCHEMY EDGE

STRONG INVESTMENT LEADERSHIP

Continuity in philosophy and strategy, with founder Hiren Ved as Alchemy India’s Whole time Director, CEO & CIO. Hiren, and the Alchemy management team have built a culture of performance excellence that has been instrumental in implementing Alchemy’s investment strategy and ensuring continuity of track record

TREMENDOUS ON-THE-GROUND INSIGHT

Comprehensive networks of relationships built over decades provide team with a regular flow of intelligence and insight on stocks/sectors/businesses and potential opportunities in the Indian business ecosystem.

ORGANIZATION OF CHOICE AMONG TIER-ONE INVESTORS

Alchemy has a top-tier standing among leading global institutional investors and some of the top Indian families, which is built on the firm’s long-term integrity.

OUTSTANDING CULTURE

Alchemy is renowned for its collaborative and innovative culture — one that prioritizes quality of ideas and is focused on generating consistent alpha combined with superior client experience.

FUND STRATEGY

Alchemy India Long Term Fund continues its strategy and investment philosophy using number of levers to generate long-term absolute returns on investor capital.

LONG ONLY

The Fund takes long-term concentrated positions in publicly listed companies in India without being benchmarked to any index.

PIPES/IPOS/PRE-IPOS

Occasionally, the Fund will invest in PIPES, IPOs, and Pre-IPOs that the management team deems  compelling

MERITS OF A LONG-ONLY APPROACH TO INDIA

  • Generate better alpha by focusing on underlying companies
  • A long only approach enables investors to tap into India’s long-term secular upside
  • Not concerned with market timing issues like a typical long/short equity manager

HAND-PICKING HIGH-POTENTIAL, GROWTH COMPANIES

STRONG GROWTH FUNDAMENTALS

▪ A competitive edge such as a cost or distribution advantage

▪ Exploit a large and growing external opportunity

▪ Scalable operations and operating leverage

EXCEPTIONAL MANAGEMENT TEAMS

▪ High-quality management teams that execute well

▪ Teams possess aggression

▪ Shareholder-friendly/aligned to business outcomes

▪ Prudent capital allocation

ROBUST FINANCIAL METRICS

▪ High Returns-on-Equity

▪ Low financial leverage

▪ Growing sales, EBITDA, and free cash flow

A PROVEN, TIME-TESTED INVESTMENT PROCESS

Alchemy uses filters based on investment themes and regularly interacts with trade and industry analysts to build a parallel working universe. This helps the firm generate a more accurate list of ideas that offer true potential.

IDEA GENERATION

▪ Identify and filter stocks by leveraging long-term secular themes/trends based on the macro and policy environment

▪ Work on a tracking universe of 500 stocks 

▪ Formulate theses through extensive company visits

▪ Attend sector- and industry specific conferences

▪ Network with leading investors and analysts

▪ Recognize and uncover opportunities with sustainable advantages and scalability

▪ Screen stocks on a broad complement of fundamental and price metrics using capability of Alchemy India’s quant team

MEETING MANAGEMENT AND INDUSTRY EXPERTS

▪ Draw up a company list for research and visits

▪ Create financial models 

▪ Interact with the target company’s ecosystem (customers, suppliers, etc.)

▪ Collect qualitative feedback on the company from trade, industry, and banking channels

▪ Conduct between 100-150 company visits each year

CONDUCT IN-DEPTH ANALYSIS AND EVALUATION

▪ Pitch the ideas to the investment management team

▪ Determine if findings of the company visits/interactions satisfy Alchemy’s investment framework

▪ Build and finalize a financial model that enables team to evaluate positions on a recurring basis

▪ If the stock satisfies all qualitative and quantitative criteria, and is available at what Alchemy determines to be a reasonable valuation and risk-reward framework, the name is included in Alchemy’s Investment Universe

Alchemy uses filters based on investment themes and regularly interacts with trade and industry analysts to build a parallel working universe. This helps the firm generate a more accurate list of ideas that offer true potential.

PORTFOLIO CONSTRUCTION & ONGOING REVIEW

  • Portfolio Manager constructs a portfolio with the stocks in the universe, consistent with their individual mandates
  • Ongoing review of all holdings, at least once a quarter
  • Monitor companies on a regular (daily and monthly) basis to capture fundamental developments and mitigate risks
  • Regularly recalibrate models and targets for return expectations, company developments and changes in industry fundamentals

About Fund Manager

Ruchika Bhatia : Fund Manager

Chartered Accountant with about 7 years of experience in long term, fundamental value investing in Indian Equities and Emerging market space. Skilled in building financial models and valuing companies. Closely worked with senior management under Corporate Planning for Indian consumer durables space.

Alok Agarwal, Head – Quant & Portfolio Manager

Alok has over 21 years of experience in Finance and Markets, primarily in equity research and fund management. He has worked with PGIM India AMC, where he managed their flagship fund and headed their Offshore Equity Desk. Alok has also worked with Deutsche Asset Management, KR Choksey Shares & Securities, E-nxt Financials Ltd and Pinnacle Academy. He holds a degree of M.Com and MS (Finance) & has also completed CA, CFA & CMT.

EXITING POSITIONS

▪ There is no set target price for stocks to exit, but Alchemy conducts a rolling review of potential risk-reward

▪ Stocks may be exited under the following conditions: 

▪ Hypothesis is no longer valid 

▪ Trimming to rebalance weights

▪ Risk-reward not in Alchemy’s favour or a better opportunity presents itself

NEVER RESTING ON FIRM’S LAURELS

Despite a strong foundational core and history of strong performance, the Alchemy team is committed to ongoing learning and growth to ensure the firm’s investment process continues to be sound and offers the best opportunity for outperformance.

DISCIPLINED PORTFOLIO CONSTRUCTION

Evaluate proposed portfolio entrants against stringent criteria, including:

▪ Reasonable price

▪ Strong growth Fundamentals 

▪ Quality management team

If all requirements are met, name enters Alchemy investment universe 

All investment universe names are reviewed on a regular basis in accordance with Alchemy’s investment process 

RIGOROUS RISK MANAGEMENT

Alchemy’s investment team constantly manages risk by reviewing portfolio- and company-level fundamentals

A company’s investment thesis & portfolio’s positioning is revisited based on:

▪ Quarterly earnings releases, conference calls and annual updates

▪ Major fundamental changes to the company or its industry 

▪ Any addition or trimming of positions

▪ A contribution review of performers/laggards

▪ Monthly meetings of the investment committee

Objective & Quantifiable Risk Metrics:

▪ 5 defined categories based on:

o Business momentum

o Quality of earnings & cashflow

o Attractiveness of business

▪ Well defined actions based on risk metrics, movement among categories and qualitative factors

A position may be sold completely if:

▪ Hypothesis is no longer valid

▪ Trimming to rebalance weights

▪ Risk-reward not in Alchemy’s favour, or a better opportunity presents itself

Regular Review of Risk Exposures

Monitoring risk limits:

▪ A stock holding is limited to a maximum 15% of the portfolio 

▪ A sector holding is limited to a maximum 40% of the portfolio

▪ The operations team notifies the investment team as the 15%/40% limits are approached

▪ The portfolio manager has five to seven business days to trim the position

Laggards are trimmed to ensure portfolio efficiency:

▪ “Laggards” are holdings that underperform on a six-, nine-, or 12- month basis

▪ The Investment Committee reviews monthly contribution reports to flag laggards

▪ Laggards are sold if they underperform for more than nine months or if, in aggregate, they comprise 10% – 15% of the portfolio by number of holdings

▪ The portfolio manager has the discretion to hold a certain limited position of laggards that the portfolio manager believes will eventually work out

Why Gift City?

  • The GIFT City promises to offer a wide range of services like capital market transactions, banking services, offshore asset management, and other financial transactions
  • The goal is to create a welcoming place where India-centric trading that’s moved to Dubai, Mauritius, or Singapore can return home
  • A free trade zone with various tax incentives enabling flow of finance, financial products and services across borders
  • GIFT City is a planned business district in Gujarat, India. It is the new business destination offering a competitive edge to Financial services and Technology related activities. An integrated development with Walk to Work concept adds immense value to the business activities
  • Single unified regulator for IFSC- Powers vested in IFSCA with respect to regulation of financial institutions, financial services and financial products in the IFSC.
  • IFSC Unit – Treated as a ‘non-resident’ under Indian exchange control regulations.
  • Other benefits include (a) low-cost structure, (b) proximity to the large Indian market and (c) enabling ecosystem
Product - AMC Category AUM (in Cr.) Performance 1M 3M 6M 1Y 2Y 3Y 5Y 10Y SI

Alchemy High Growth

AMC Name: Alchemy Capital Management Pvt ltd Inc Date: May 08,2002
Multi Cap
(PMS)
871 Strategy 5.8 13.7 19.8 31.6 10.2 16.7 9.4 14.1 20.3
S&P BSE 500 8.0 12.4 18.5 26.5 15.1 20.4 17.6 16.1 17.3

Alchemy High Growth Select Stock

AMC Name: Alchemy Capital Management Pvt ltd Inc Date: Dec 19,2008
Multi Cap
(PMS)
3,338 Strategy 5.9 13.4 17.8 34.0 12.9 23.3 14.9 19.2 20.3
S&P BSE 500 8.0 12.4 18.5 26.5 15.1 20.4 17.6 16.1 16.6

Alchemy Ascent

AMC Name: Alchemy Capital Management Pvt ltd Inc Date: Sept 03,2019
Multi Cap
(PMS)
401 Strategy 8.6 14.1 30.3 45.4 13.2 28.9 NA NA 21.3
BSE 200 8.0 12.4 18.5 26.5 15.1 20.4 NA NA 21.5

Alchemy Alpha 100

AMC Name: Alchemy Capital Management Pvt ltd Inc Date: Aug 16,2023
Large Cap
(PMS)
NA Strategy 7.40 12.80 NA NA NA NA NA NA 15.60
Nifty 50 TRI 5.60 4.80 NA NA NA NA NA NA 3.70

Alchemy Smart Alpha 250

AMC Name: Alchemy Capital Management Pvt ltd Inc Date: Aug 10,2023
Multi Cap
(PMS)
NA Strategy 7.90 17.40 NA NA NA NA NA NA 22.50
S&P BSE 500 TRI 8.00 12.40 NA NA NA NA NA NA 14.70

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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.