In 2018, Marcellus Investment Managers was established with the primary goal of influencing the efficient capital allocation of the Indian economy. By investing household resources in top-tier Indian businesses with a lengthy track record of good governance and capital allocation, Marcellus want to achieve this. In addition to aiming to give The investors healthy returns, the portfolio management technique also takes only minimal risks in order to achieve so.
Marcellus’s core investment management team has been working together for 15 years, and the experiences and knowledge gained over that period have influenced the company’s investing ethos. The SEBI has authorized Marcellus to offer Investment Advisory (IA) and Portfolio Management Services (PMS; SEBI registration number INP000006183). The primary investment offering is the Marcellus Consistent Compounders. Portfolio Management Services (CCP).
- Number of Stocks: 35- 45 stocks
- Type of Fund: Advisory Fund
- The top 5 constitute 19-31% of the portfolio
- Small-Midcaps constitute 40-62%
- 50% average turnover
- Minimum Investment of INR 10,00,000 (Rs 10 Lacs)
- Fixed Fees to the client @ 2.25% per annum, charged quarterly.
Investment Philosophy & Methodology
Marcellus is a firm believer in using straightforward methods to create riches. For its investors, Marcellus strives to create a trustworthy and transparent system. Three main pillars support their investment strategy:
The first step in identifying the greatest firms is clean accounting. Here, Marcellus has consolidated financial data for the group of companies spanning more than six years. After that, the businesses are ranked and compared. The renowned book on forensic accounting, “Financial Shenanigans” by Howard Schilit, inspired the clean accounting approach.
The following phase is creating portfolios and maintaining them without churn over the following 10 years. From this effort, a return of 20% to 30% each year might be anticipated. Portfolios with this level of volatility resemble those that contain Indian government bonds.
In the last phase, management teams are used to evaluate businesses. Companies with concentrated management and businesses that have widened their competitive moats over time are sought after by Marcellus.The benefits of the mindset mentioned above are evident in their results. With such a concept, compounding gains strength. Additionally, this system lowers transaction costs and has helped avoid mistakes.
Companies in Large, mid, and small-cap segment
- Accounting red flags based on Marcellus’ forensic accounting framework
- Low financial leverage
- Consistent profitability
- Select top stocks by composite rank based on
- Basis value metric
- Semi-annually rebalanced
- Exposure To A Variety Of Unrelated Elements, Such As Value And Quality
- Capturing Of Performance From Tiny Businesses. Zero Market Cap Bias
- Rules-Compliant Semi-Annual Portfolio Rebalancing And Review
- Assures Portfolio Is In Line With Investing Goals
- Keeping Portfolio Churn In Check While Routinely Buying Inexpensive Equities
- Method and portfolio construction tested across ~16 years of history
- Investment process over discretion
- No star portfolio manager risk
- The final portfolio and rules are actively monitored to ensure alignment with investment objectives.
MeritorQ sticks to good investing principles
- Long only portfolio
- No use of leverage
- Marcellus’ proprietary forensics framework
- No use of derivatives
Numerous businesses with weak fundamentals are undervalued for the right reasons. The investor’s main responsibility is to determine whether the stock has strong fundamentals to begin with before moving on to value. Through a rules-based technique that looks to find high-quality businesses that are comparatively undervalued compared to their inherent worth, Marcellus have captured the core of this approach. Multiple criteria, including low financial leverage, clear financial records, and constancy of profitability, are used to evaluate quality.
- Materials 46.1%
- Consumer Staples 15.6%
- Health Care 12.9%
- Information Technology 15.9%
- Consumer Discretionary 1.3%
- Financials 1.2%
- Utilities 5.6%
- Industrials 1.5%
Michael Lewis’ bestseller contains lessons for investors
- Construction of a portfolio using quantitative methods based on business fundamentals
- Choose reputable businesses that are undervalued compared to the rest of the market.
- Focus on your portfolio, which provides better risk-adjusted returns, rather than simply one or two stocks.
- Refresh portfolio every two years, adding undervalued firms.
There are some timeless principles for successful investing
Buy Good Companies
- High return on capital
- Solid financial condition
- Clean accounts
At prices below intrinsic value
- Discount to intrinsic value compared to the rest of the market
- Intrinsic value based on free cash flow
Mitigate human biases
- Avoid behavioral biases
- Process over discretion
Salient Features of the product
- With a quantitative + fundamentals strategy based on sound investment concepts, only hold long positions.
- Rebalanced every six months, at the end of March and September, respectively, by the requirements. The portfolio’s chosen stocks are generally kept for at least a year.
- A portfolio of 35–45 stocks diversified throughout big, mid, and small-size segments and factors (quality and value). There are no restrictions on the deployment of funds to certain stocks or industries because the goal is to choose the finest firms that are both profitable and inexpensive.
- Minimizes discretion in the process of building a portfolio. No danger of a star portfolio manager.
- Suitable for investors with a longer time horizon than three years.
Before being included in the investment portfolio, every firm must pass a stringent and demanding filter.
- The Universe: Stocks in the BSE500
- Forensic Accounting Screen
- Sustainability Filter
- Bottom Up research and analysis
- 3rd Party channel checks
- 12-15 portfolio stocks
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.