AAA India Equity Fund

About Company

Multi-decade Investment Experience Rajesh Kothari, Founder of the firm has 27+ years of experience. Prior to AAA, Rajesh was Fund Manager with DSP MF & Partner with Voyager Investment Advisors (FII). Received CNBC TV18 – CRISIL Mutual Fund of the Year Award & Platinum Fund Manager Award for DSP EQUITY FUND. The Investment team has combined experience of more than 80 years in Indian equity market. Client-Centric Business Model AAA is only Investment Management and not into other businesses like broking, wealth management, etc. Hence, no conflict of interest for the clients. AAA clients enjoy the benefits of directly communicating with the founder, thereby ensuring enhanced understanding. AAA clients include family offices, UHNIs and AAA PMS product is presently distributed by well known national distributors. Superior Track Record AAA is one of the few players in the industry which has completed 13 years. During the last 13+ years, AAA IOP PMS delivered 17.7% CAGR vs 11.6% CAGR reported by BSE 500 Index. AAA IOP PMS received Best 10 year Performance Award (rank 2) in the country for delivering superior risk adjusted returns across categories by PMSAIF World (Feb23)(data analysed by IIM Ahmedabad).

Fund Snapshot

Investment Horizon	3–5 Years
BSE Benchmark Index	500
Minimum No. of Stocks	30
Large Cap Exposure	40-100%
Mid & Small Cap Exposure	0-60%
Max Weight in 1 stock	10%
Max Weight in 1 Sector	35%
Max Weight in top 10 Stocks	50%
Type	Open Ended

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About Fund Manager

Rajesh Kothari : Founder & Managing Director

Rich experience of more than 26 years in Indian capital market with expertise in both Long Only & Long Short investment strategy. Former Director with Voyager Investment Advisors (US$500m) – USA based India dedicated fund. During his tenure, fund outperformed the benchmark indices significantly Former Fund Manager with DSP Merrill Lynch Fund Managers (DSP MF) for more than four years. The schemes delivered annualized return of 55% (Equity Fund) & 62% (Top100 Fund) outperforming benchmark indices by more than 20% & 10% respectively. The equity schemes maintained its “1st Quartile Ranking” consistently during his tenure.
Achievements
Received CMA Young Achiever Award 2014
Rated as “Platinum Fund Manager” by Economic Times for DSP ML Equity Fund on a risk-adjusted return basis (Jul 2006)
Received CNBC TV18 – CRISIL Mutual Fund of the Year Award 2006 for DSPML Equity Fund and Lipper India Fund Awards 2006 for best equity fund group for 3 years
Invited to Maharashtra Economic Summit to present views on Indian Infrastructure
Invited by Institute of Directors to present views on Governance Deficit
Actively involved with Arham Yuva Group – philanthropic initiative

Investment Philosophy

Protecting Capital – DSD Mechanism

DIVERSIFICATION

Three important risks : Governance, Technology and Business cycle – can be reduced only by Diversification. We invest across market cap, sectors, and companies to reduce company/sector specific risk.

STAGGERED APPROACH

We build the portfolio over a period of time. We do not follow Model portfolio approach

DISCIPLINED EXIT STRATEGY

We have a disciplined Exit strategy. We sell/reduce due to rebalancing of the portfolio, change in growth assumption of our portfolio company, expensive valuations.

Creating Wealth – 3M Approach

Market Size

Market size determines size of opportunity. We prefer companies which are targeting large market size to generate exponential returns.

Market Share

We buy the companies which are leaders in their sector as they are best positioned to navigate upturn and downturn of the economy.

Margin Of Safety

The price is what you pay. Value is what you get. We buy the companies which are available at reasonable valuations

Investment Process: Simplified

Screening Stage

Companies which have a good corporate governance, strong business moats along with a reasonable profit size. Profit Propellers – 800 PAT > 50 crs

Deep Dive Stage

Companies which are market leaders and effectively positioned to grow and multiply. Risk Mitigators – 300 OCF/EBITDA, D/E, other filters

Selection Stage

Companies with strong earnings growth prospects and right valuations. Alpha Producers – 40-60

Internal Checks - Forensic Assessment

ACCOUNTING POLICIES

Assess the consistency and fairness of the accounting policies

QUALITY OF CASHFLOW

Ability to convert the revenue to cash and re-invest into the business

TAXATION MISCHIEFS

Identify the potential fraud

MANAGEMENT PRACTICES

To assess the governance

Internal Checks – Longevity Assessment

LONGEVITY OF RETURN RATIOS

Gauging business profitability and efficiency

LONGEVITY OF REINVESTMENT

Intensity to generate Self sustaining growth

LONGEVITY OF CASHFLOW

Identify financial strength

LONGEVITY OF BUSINESS GROWTH

Sustenance of revenue and earnings growth, Assessing competitive advantage

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Fund Overview

Exit Strategy

The only constant is change. The average lifespan of a company listed on the S & P 500 has reduced from 90 years in 1935 to 18 years, as per a McKinsey report. We are agile, and active, never letting our guard down.

There is a need to rebalance weights for risk management purposes
A company no longer meets our buy/hold criteria
A company no longer meets our valuation criteria
There is no longer a durable double digit return expectation for a company’s stock
There is a more compelling investment opportunity to fund

Why AAA India Equity Fund?

Participation in IPOs, up to 10% in pre-IPOs/unlisted Equities, and up to 20% in derivatives to hedge

Access to Market Leaders

Aims for multi-cap exposure to ~50 market Leaders across sectors.

Growth Potential

Aims to capture long-term growth with a strong balance sheet and high RoCE.

Grounded in Research

Combines top-down and bottom-up research with strong due diligence.

Award Winning

Track Record We have a proven track record of investment in companies yielding multibagger returns.

A High Conviction & Quality Approach

We invest in businesses with established management, a solid balance sheet, exceptional profits growth, and excellent corporate governance based on our unique 3M Investing Methodology. We think we can protect money and offer stability across market cycles by making long-term investments in businesses with strong fundamentals and lasting competitive advantages. Our 3M model of market size, market share, and margin of safety guides our radically resilient strategy.

The AIF Advantage

Hassle-Free: Onboarding and departing processes are very easy and hassle-free.
Pooled-account Convenience: As there won’t be any transactions in the personal account, which would increase the complexity of accounting, pooled accounts result in several conveniences.
Tax Is Deducted At Source: There is no double taxation because tax is deducted at source.

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