Abakkus funds beat market comprehensively in 2020
Both close-ended AIFs perform in a year which was volatile, and tested the nerves of even seasoned investors
Alternative investment funds (AIFs) of Abakkus Asset Management, led by Sunil Singhania, have delivered satisfying performance to investors in 2020. Abakkus Emerging Opportunities Fund – 1, also called AEOF, logged in 51% returns for CY20. On the other hand, Abakkus Growth Fund – 1 (AGF) clocked a 28% jump for the year. Regardless to say, both the close-ended category III AIFs beat markets and respective benchmarks handsomely.
2020 will go down in history books as one of the most volatile years for equity investors. Investor sentiment swayed from extreme fear in the first quarter of 2020 and sharp corrections to an optimistic scenario towards the last quarter of 2020. While economic data continued to be challenging, benchmark equity indices almost doubled from their lows in a matter of just 9 months.
Abakkus Emerging Opportunities Fund – 1
Abakkus Emerging Opportunities Fund – 1 focusses on companies with a market cap of less than Rs 5,000 crore (mid and small-cap). Its endeavor is to generate significant alpha and wealth creation over 3-4 years holding period. The AIF follows a 15:15:15 rule; Invest in companies qualifying in at least 2 out of these 3 criteria; >15% ROE, >15% earnings growth and < 15 P/E Ratio. It typically pursues 2nd or 3rd player within the sector but at significant discount to the leader.
Abakkus Emerging Opportunities Fund – 1 adopts a differentiated portfolio approaching — “MEETS” Framework. The stock basket tries to cap single stock exposure at less than 10% and individual sector exposure below 30%. It does become a select anchor investor in IPO of companies as a QIB. But there are no unlisted names to ensure liquidity at all times. Its benchmark is BSE 500. As on Dec. 2020 end, top 10 holdings were Jubilant Life Sciences, The Anup Engineering, Jindal Stainless Hisar, Muthoot Finance, Route Mobile, Birlasoft, Mastek, Federal Bank, Mahindra And Mahindra Financial Services and Max Financial Services.
In 2020, Abakkus Emerging Opportunities Fund-1 posted 51% return, compared to 16.8% gain in BSE 500. Since inception, the AIF has given 36.1% return compared to 11.6% for the benchmark in the same period. In FY21, the fund has doubled money compared to 64.9% of BSE 500. Do note the fund level performance is based on TWRR and investor returns may differ, based on their class, tier, fee structure and point of allotment of units.
Abakkus Growth Fund – 1
Abakkus Growth Fund – 1 is a benchmark agnostic multi-cap portfolio with 30-40 of best ideas picked via a bottoms up approach. Similar to AEOF, Abakkus Growth Fund -1 endeavors to generate alpha and wealth creation by buying with over 3-4 years holding period. The stock basket tries to cap single stock exposure at less than 10% and individual sector exposure below 30%. It does become a select anchor investor in IPO of companies as a QIB. Investment in listed long equity, but no unlisted names to ensure liquidity at all times.
As on Dec. 2020 end, AGF’s top holdings are ICICI Bank, Mastek, Route Mobile, HCL Technologies, Aurobindo Pharma, Adani Enterprises, Max Financial Services, Muthoot Finance, Jindal Stainless Hisar, and State Bank Of India. The AIF’s benchmark is BSE 200.
In 2020, Abakkus Growth Fund – 1 posted 28.1% return, compared to 16.3% gain in BSE 200. Since inception, the AIF has given 15.9% return compared to 9.5%of the benchmark in the same period. In FY21, the fund has nearly doubled money at 92.6% compared to 63.6% of BSE 200. Do note the fund level performance is based on TWRR and investor returns may differ, based on their class, tier, fee structure and point of allotment of units.
As per Abakkus, the sharp rally in equities has led to apprehensions of its sustainability, particularly given the fact that challenges on the economic front still persist. Also the recent upsurge in commodities; industrial as well as agri, might lead to inflation and subsequent rise in interest rates.
However, Abakkus feels tailwinds are visible in the form of higher than expected earnings, positive news flow on Covid-19 front and reopening of the global economy, ample liquidity and move towards emerging markets from a global perspective.
Corrections are expected, though they should be short and swift, with the cautious positioning and low equity allocation acting as a floor to any major correction. The year 2021 should be a positive year for Indian equities, with broader markets expected to do much better than the NIFTY50, Abakkus says.
Wealthzi is organising a digital conclave with Aman Chowhan, Fund Manager, Abakkus on Saturday, January 16, 2021, at 11 AM. The topic of discussion is, “Why we’re ultimately optimistic amid uncertainty”.
For registration, click here –(Seats are limited, so hurry!)