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About Fund Manager

Mr. Hiren Ved, Director & CIO

Hiren Ved, an equity market veteran, serves as the Director & CIO at Alchemy Capital Management where he has been leading the firm’s Asset Management business. With over 30 years of experience in the Indian equities market, Hiren has developed a sustainable long-term investment philosophy based on fundamental research. He is known for his deep sector knowledge, bottom-up research skills and stock picking abilities. He holds a graduate degree in Accounting from Mumbai University and a post-graduation in Management & Cost Accounting from The Institute of Cost Accountants of India.

Investment Philosophy

Alchemy Investment Philosophy is “Growth at Reasonable Price“. The philosophy behind growth investing is based on the fact that India is a high growth economy with a strong entrepreneurial culture. Our endeavour is to identify and invest in growth companies through a combination of top-down and bottoms up fundamental research to enable long term wealth creation. A typical portfolio may generally consist of between 8-12 stocks. We may construct such concentrated portfolios as per the clients need and understanding

Investment Objective & Strategy

Investment Objective
» To generate long-term returns by investing in equities and equity related instruments, across all market capitalizations with a mid cap bias
Strategy
» Invest in companies across the market capitalization range, which have high growth potential and potential to deliver long-term capital appreciation

Unique Feature

  • Concentrating on top choices from the Alchemy team’s well-regarded bottom-up stock-picking abilities certainly looks like an intriguing high-risk, high-reward strategy. A flexible strategy enables the fund manager to switch between investing philosophies and market capitalisation in accordance with the greatest prospects.
  • The investing team, ideology, and process are stable since they have a seasoned and well-respected co-founder. CIO and fund manager have extensive equities investment experience.
  • High expansion Long-term performance of a particular stock was also strong, and it was able to maintain a position in the top 1 or 3 quartiles. However, recent years’ underperformance has reduced the favourable trailing return. This recent underperformance is not something we consider to be systemic. We favour Alchemy’s multicap-focused approach, particularly its selection of high-growth stocks.
  • India is one of the nations with the quickest economic growth. It has the entrepreneurial reserves to take advantage of chances by using a “Top-Down” and “Bottom-Up” strategy to stock selection with an emphasis on superior risk-reward.
  • A typical portfolio consists of 8–12 stocks from several industries; one stock exposure is limited to no more than 25% at cost.

Brief Purpose

With a mid-cap bias, long-term returns will be generated by investing in equities and equity-related instruments across all market capitalisations.

Suitability for Investment

  • Appropriate for an investor looking to participate in India’s growth story through equities.
  • Long-term investment horizon: 3 to 5 years is an ideal investment horizon.
  • High-risk, high-reward strategy.

Combination of top-down and bottom-up stock selection, as well as high conviction

The Alchemy High Growth Select Stock (AHGSS) strategy capitalises on Alchemy’s strengths in top-down and bottom-up research and stock selection. Alchemy’s investment team has a proven track record of finding winners over time. True characteristics of finding winners necessitate a thorough understanding of the business. The drivers of long-term sustainable performance in organisations can then be translated into long-term return performance.

It can affect the company’s entire growth cycle because we understand its business and value drivers. A long-term investment strategy allows us to benefit from profit growth and prospective business assessment re-rating, which may result in superior returns.

Over diversification dilutes returns

Markets are cyclical, oscillating over time between a bull, bear, and sideways/consolidated phases. While a well-diversified portfolio is necessary to capture a diverse range of businesses, excessive diversifying tends to dilute returns, except in a roaring bull market where the tide lifts all boats. However, markets frequently experience short periods of bull and bear cycles with long periods of sideways to consolidation in a range.

A concentrated portfolio allows investors to focus more on individual stock results and returns, limiting the correlation to broad market overall index returns over time.

A distinct strategy for UHNI, FO, and large allocators

In our experience, most large investors, such as UHNIs, Family Offices, and large allocators, already have broad market exposure through direct investing, allocation to MFs, and PMSs. As a result, allocating a portion of capital to a concentrated strategy makes perfect sense because the investor is already diversified, and a distinguishable strategy can generate additional differentiated returns.

Fund Highlights Highly focused on stock selection than on market cap allocation.
Overweight in specific stocks of high conviction.
In general, the concentrated portfolio consists of 8 to 12 stocks.
Allocation across Market Cap Unto 100% in equity (cash portion may be deployed in liquid funds or debt securities).
Minimum Ticket Size 3 Crores.

Basis of selection of types of securities as part of the investment approach

  1. Tracking Universe — Based on market capitalization (ideally over 4000 crores), qualitative governance criteria, long-term attractiveness, and company ROE profile, we established a tracking universe of roughly 400-425 firms.
  2. Investible Universe – Based on past and future fundamental variables such as revenue and EBIDTA growth, cashflow conversion efficiency, and core ROE of the business, as well as several other relevant variables that may be unique to a business, an investible universe of companies, is created from this tracking universe. In addition to objective fundamental metrics and qualitative managerial competencies, governance norms and the business’s competitive capacity are assessed. A full valuation exercise is also performed using one or more valuation parameters, like to arrive at an appropriate value range for investing in the securities, use P/E, P/B, EV/EBIDTA, DCF, and other methods.
  3. Portfolio Construction – the strategy’s Portfolio Manager is then free to build the Client’s Portfolio from the investible universe at his leisure.

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