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ALCHEMYASCENT
Inthecurrentinvestmentworlditisbelievedthatthekeytoanysuccessfulinvestmentstrategyisinfindingthe“rightstock”,the“righttheme”,the“rightsector”andthe“rightcycle”.Eventhemostexperiencedinvestorsarepronetobiaseswhichareinherentintheinvestingprocess.Thisresultsininconsistentalphageneration.
• However,webelievethatbuildingahighperformanceportfolioinvolvesmuchmore.Stockallocation,itsrelativerankingintheportfolioandtimingalongwithriskcontrols,alsoplayaveryimportantpartofthealphagenerationprocess.Webelieveinstrongdatabasedresearchprocess,whichconsidersallsourcesofalphagenerationcomprehensively,thushelpsincreatinganunbiaseddisciplinedinvestmentapproach–akeytosuccessfulandconsistentinvestmentoutcomes.
• AlchemyASCENT*endeavorstoprovideaconsistent“highalpha”investmentstrategywhichbuildportfoliostodeliverconsistentoutperformanceoverthelongterm,usinganobjective,backtestedanddatadrivenapproachdevoidofanybiases.
RESULTORIENTED
UNBIASED DISCIPLINED CONSISTENT DATADRIVEN ASCENTPORTFOLIO
*AlchemyCapitalManagementPvtLtd(AlchemyCapital)isregisteredasaPortfoliomanagerwithSEBI.AlchemyAscentistheproductofAlchemyCapital'sPortfolioManagementServices.
*Theinvestmentobjectivesareindicativeandtherearenoassurancesthattheywillbeachieved.
WHAT WHY/HOW KEYVARIABLES
Growth
• Growthwhichissignificantlymorethanthecostofcapital• Consistent&Continuousgrowth• Growthadjustedfordifferentlevelsofmargins• Negativemarkingifthereishighdivergenceordeterioration
ingrowthand/orReturnonCapital
• Revenue• Income/CashFlow• Margins(Net&
EBITDA)• ReturnonCapital
ValuaFons
• ValuecalculatedasPricetoEarningandPricetoCashFlow(ExcludingFinancials)
• Valuationsisadjustedtothequalityoffirm• Valuationisalsoadjustedtothegrowthofthefirm
• EarningsYield• TreasuryYield• PricetoEarnings
• PricetoCashFlow
• ReturnonCapital
• NetMargin
Quality&RiskManagement
• Rejectionismoreimportantthanselection• Strictnegativemarksforbadbalancesheetitems,butno
positivemarksforthesameasitismandatedofaninvestmentcandidate
• ThisalsohelpsusfilteroutcompanieswhicharenotmanagedproperlyORwhicheventuallyturnouttobeCAGRKILLERS
• ReturnonCapital• FreeCashFlow• CashConversion
Cycle• WorkingCapital
• Debt• ShareCapital
MarketCycle
• Presence/Absenceofrewardingmarketcycle• Stockwhichisappreciatedbymarketsincreasesourwinning
ratio• Pastbehaviourofdrawdownandvolatility
• Volatility• Performancevis-à-
visIndex
• PeriodicDraw-downs
WHAT,WHY&HOW
Preamble
ALCHEMYASCENT
STOCKSELECTION•MarketCapitalizationCut-off:INR4,000Crores
•Investiblestockshavetopassastringentsystemofeliminatingvaluedestroyingfactors&aresometimesvetoedbasedonriskandfundamentalforensicanalysis
•Over50Quantifiedfundamentalparametersandtheircombinationsusedforscreeningofinvestibleuniverse
•HighestRankedStocksbasedonpointsfiltered
CAPITALALLOCATION
•Portfolioonanaverageholds25stocks-30stocks
•Weightperstockmayrangefrom3%to6%@cost,exceptionalstocksmaygetanallocationof10%@cost
•Rankingsystemoptimizesstocktobeheldintheportfolioandcreatesallocationforthesame
RISKMANAGEMENTA. ProhibitiveRisk
•QualityFilters•NegativeMarkingforUnfavourablefactorssuchasBalanceSheetratios
B. ParticipativeRisk/ExitStrategy•DailychangeinRank/ScoreofIndividuaLStock(UsingFundamentalData)•Draw-Down/CAGRnonperformer•Multiplerulesbasedonabovescenarios
C. Operationalriskminimizedusingautomationofprocesses
INVESTMENTPROCESS
Start Dates Market Cycles ASCENT^ BSE200 Mutliple
01/01/1997 Start of Year 50.49% 1.09% 46.29
15/06/1997 Near Market Top 38.46% 1.00% 38.58
01/01/1998 Start of Year 45.66% 1.98% 23.02
10/03/1998 Near Market Top 47.23% 0.46% 102.17
01/01/1999 Start of Year 47.17% 19.93% 2.37
19/08/1999 Near Market Top 24.61% 6.95% 3.54
30/12/1999 Near Market Top 19.73% 8.11% 2.43
01/01/2000 Start of Year 19.55% 6.90% 2.83
07/02/2000 Near Market Top 19.77% 4.60% 4.30
01/01/2001 Start of Year 45.14% 22.16% 2.04
01/01/2002 Start of Year 55.35% 37.26% 1.49
11/02/2002 Near Market Top 51.25% 35.59% 1.44
01/01/2003 Start of Year 67.21% 46.48% 1.45
20/12/2003 Near Market Top 17.90% 10.37% 1.73
01/01/2004 Start of Year 15.47% 8.74% 1.77
01/01/2005 Start of Year 29.18% 19.36% 1.51
01/01/2006 Start of Year 42.98% 16.38% 2.62
20/03/2006 Near Market Top 24.22% 10.03% 2.41
01/01/2007 Start of Year 7.48% 2.09% 3.59
01/11/2007 Near Market Top 8.73% -1.09% 3.00 *
01/01/2008 Start of Year 7.49% -1.75% 3.00 *
01/01/2009 Start of Year 28.97% 16.35% 1.77
09/03/2009 Near Market Bottom 31.78% 21.88% 1.45
01/01/2010 Start of Year 22.27% 9.34% 2.38
06/09/2010 Near Market Top 23.86% 6.34% 3.77
01/01/2011 Start of Year 24.14% 5.91% 4.09
01/01/2012 Start of Year 28.05% 13.64% 2.06
01/01/2013 Start of Year 31.67% 13.71% 2.31
16/05/2013 Near Market Top 31.84% 13.40% 2.38
01/01/2014 Start of Year 19.33% 12.94% 1.49
• 5YearCAGRreturnsfordifferentStartDates• “StartDates”correspondtodifferentportfolio
startingdatesforbacktesting,thesedatesrepresent• Differentmarketcyclesor;• Startofeachyearsince1997
• SelectionofDifferentMarketCycleDates:• “NearMarketTop”:-Correspondstoa
randomdatebetweenamarkettopanda3monthearlierperiod,sothatweget90%-100%deployedbeforethecrash.Thisteststhevulnerabilityofthestrategy
• “NearMarketBottom”:-Correspondstoarandomdatebetweenamarketbottomanda3monthearlierperiod.Thisteststhedynamicdeployingcapacityofthestrategy
• “Multiple”=AscentReturn’s÷BSE200Return’swhere
• *Representsamultipleof3asBenchmarkis–veandAscentis+ve
• #Representsamultipleof2whereBenchmarkReturnis–veandAscentReturnis–ve,butAscentReturn>BenchmarkReturn
^Thebacktestedpastperformanceisforillustrationpurposeonlyandisnotanindicator/assuranceoffutureperformance.^Returnsareshownasgrossofallfeesandexpenses.
5YEARCAGRRETURNSFORDIFFERENTSTARTDATES
*Theinvestmentobjectivesandallocationareindicativeandtherearenoassurancesthattheywillbeachieved.
ALCHEMYASCENT
5YEARROLLINGCAGR
1997-2001
1998-2002
1999-2003
2000-2004
2001-2005
2002-2006
2003-2007
2004-2008
2005-2009
2006-2010
2007-2011
2008-2012
2009-2013
2010-2014
2011-2015
2012-2016
2013-2017
2014-2018
ASCENT* 51% 47% 65% 21% 44% 60% 69% 16% 30% 22% 7% 6% 28% 24% 23% 26% 30% 23%
BSE200 1% 2% 20% 8% 22% 37% 47% 9% 20% 16% 2% -2% 16% 10% 6% 14% 14% 13%
Alpha 49% 45% 46% 13% 22% 23% 22% 7% 11% 6% 5% 7% 11% 14% 17% 13% 16% 11%
*Thebacktestedpastperformanceisforillustrationpurposeonlyandisnotanindicator/assuranceoffutureperformance.|*Returnsareshownasgrossofallfeesandexpenses.
FundManagerFundManager-VikasKumarWithover19yearsofequitymarketexperience,Mr.VikasKumarhasexpansiveexperiencethatincludesequityanalysis,privateclientfundmanagementandstrategybuildingonasell-sideinsvtuvonaldesk.Hespecializes in creavng data-based quanvtavve algorithms & mathemavcally objecvve implementavonstrategies. His unique research paper on investmentmethodology, A Quanvtavve System for ReflexiveFinancialMarkets,earnedhimaU.S.copyright.HepursuedaBAinMathfromDelhiUniversity,qualifiedfor Indian Insvtute of Technology Joint Entrance Examinavon (IIT-JEE),was a state-levelNavonal TalentSearch Examinavon (NTSE) merit scholar and one of the navonal CBSE toppers. Prior to Alchemy, heworkedwithDalal&BroachaStockBrokingandcollaboratedatRelianceCapital.HewasalsonominatedasoneofthebestQuantAnalystsinAsiabyInsvtuvonalInvestormagazinein2009.
OBJECTIVEMETHODINVESTING*
1 Unbiasedapproachtowardseachstock 2 Greed/Fear/Hopearemitigated
byhavingobjectivemethodforinvestment
3 FocusonDiscipline&DatatogenerateCAGR
4 BackTestedformorethan21yearsacrossmanymarketcycles
5 Abilitytoscanover2000stocksdailytofindawinner 6 Endeavortogeneratereturns
outperformingtherelevantIndexover3-5Year
7 Churnratioof~0.67 8 Averagecashlevelis~10% 9 Focusedunbiasedactiveportfoliomanagement
BACKTESTEDPERFORMANCE5yearsrollingreturnsforPortfoliostarted01-January1997till31-December2018.
*Theinvestmentobjectivesareindicativeandtherearenoassurancesthattheywillbeachieved.
ALCHEMYASCENT
GENERALRISKFACTORS• Allinvestmentproductsa|ractvariouskindsofrisks.PleasereadtherelevantDisclosureDocument/ClientAgreementcarefullybefore
invesvng.
GENERALDISCLAIMERS• Theinformavonandopinionscontainedinthisreport/presentavonhavebeenobtainedfromsourcesbelievedtobereliable,butnorepresentavonorwarranty,expressorimplied,ismadethatsuchinformavonisaccurateorcomplete.
• Informavonandopinionscontainedinthereport/presentavonaredisseminatedfortheinformavonofauthorizedrecipientsonly,andarenottoberelieduponasadvisoryorauthoritavveortakeninsubsvtuvonfortheexerciseofduediligenceandjudgementbyanyrecipient.
• Theinformavonandopinionsarenot,andshouldnotbeconstruedas,anofferorsolicitavontobuyorsellanysecurivesormakeanyinvestments.
• Nothingcontainedherein,includingpastperformance,shallconsvtuteanyrepresentavonorwarrantyastofutureperformance.• Theclientissolelyresponsibleforconsulvnghis/her/itsownindependentadvisorsastothelegal,tax,accounvngandrelatedma|ersconcerninginvestmentsandnothinginthisdocumentorinanycommunicavonshallconsvtutessuchadvice.
• Theclientisexpectedtounderstandtheriskfactorsassociatedwithinvestment&actontheinformavonsolelyonhis/her/itsownrisk.Asacondivonforprovidingthisinformavon,theclientagreesthatAlchemyCapitalManagementPvt.Ltd.,itsGrouporaffiliatesmakesnorepresentavonandshallhavenoliabilityinanywayarisingtothemoranyotherenvtyforanylossordamage,directorindirect,arisingfromtheuseofthisinformavon.
• ThisdocumentanditscontentsareproprietaryinformavonofAlchemyCapitalManagementPvt.Ltdandmaynotbereproducedorotherwisedisseminatedinwholeorinpartwithoutthewri|enconsent.
AlchemyCapitalManagementPvt.Ltd|B-4,AmerchandMansion|16MadameCamaRoad|Mumbai400001.|URL:www.alchemycapital.comCIN-U67120MH1999PTC119811|Email ID: [email protected]
FundKeyTerms#ProductName ALCHEMYASCENT
Por�olioManager AlchemyCapitalManagementPvtLtd,aSEBIRegisteredPor�olioManagerIdealInvestmentHorizon 3to5yrsInivalInvestmentAmount MinimumRs25Lacs
UnderlyingAssetClass ListedEquives
Inflows/Corpus FundsthroughCheque,RTGSorNEFTNote:StockTransferwillnotbeaccepted
AddivonalInflowsAnexisvngclientofAlchemyAscent,wanvngtogiveaddivonalInflowintothesameproduct,willhavetogiveaminimumRs25lacandaseparatePor�oliowillbecreatedforeachaddivonalInflow
SubscripvonWindow Onceeverycalendarmonth,onthe1stworkingdayofthemonthNote:Preacvvavonoftheaccount,thecashwilllieuninvested.
RedempvonWindow DailyRedempvon*subjecttoExitFees
Benchmark BSE200
RiskProfile HighRisk
FundManager Mr.VikasKumar
EligibleInvestors
ResidentIndians,NRI,HNI,HinduundividedFamily(HUF),Banks,BodiesCorporate,PartnershipFirm&Trusts(excl.investorswhohaverestricvonsinpurchasingstocks,suchasclientswhowantShariacompliantpor�olio,JainPor�olioandConsulvngclients,wherewehavetogobackandcheckwiththeircompliancebeforeinvesvnginstocksetc.)
FeePlanOpvon1:FixedFeePlan
UpfrontFee Upto2.25%oftheTotalInvestmentAmounti.e.bothinival&addivonalinvestment
FixedFees 2.5%perannumonNetAssetValue,chargedquarterly
FeePlanOpvon2:FixedPlusVariableFeePlan
UpfrontFee Upto2.25%oftheTotalInvestmentAmounti.e.bothinival&addivonalinvestment
FixedFees 1.5%perannumonNetAssetValue(beforechargingperformancefee)andchargedquarterly
HurdleRate 10%p.a.
PerformanceFees 15%ofreturnschargedannuallyontheeffecvvedate(i.e.accountacvvavondate),withthehurdleof10%andHighWatermarkapplies
#Thesearenotthecompleteterms;PleasereadtheDisclosureDocument/ClientAgreementforcompletedetails.*Parvalwithdrawalswillonlybepermi|edsubjecttotheresidualvalueofthePor�olionotfallingbelowstatutoryrequirementasonthedateofthewithdrawal.
DISCLAIMERS