Alchemy High Growth Strategy: Investment Philosophy, Portfolio Construction & Performance
Alchemy High Growth Strategy
Alchemy High Growth (AHG) is an equity-focused investment strategy designed to generate long-term returns by investing across market capitalizations using a growth-oriented investment philosophy.
The strategy combines:
- top-down research
- bottom-up stock selection
- long-term investing discipline
- portfolio risk management
The investment approach focuses on identifying:
- growth businesses
- scalable companies
- quality management teams
- businesses with strong capital efficiency
Alchemy High Growth (AHG)
Investment Objective
To generate long-term returns by investing in:
- equities
- equity-related instruments
- companies across all market capitalizations
Investment Philosophy & Strategy
Alchemy’s investment philosophy is based on:
- “Growth at Reasonable Price”
The philosophy assumes:
- India is a high-growth economy
- India has a strong entrepreneurial culture
The strategy aims to identify and invest in growth companies through:
- top-down research
- bottom-up fundamental analysis
The objective is long-term wealth creation through disciplined investing.
Fund Management
- Fund Manager: Alok Agarwal
Securities & Investment Horizon
Type of Securities
- Equity
Investment Horizon
- 3 to 5 Years
Risk Profile
- High Risk
Portfolio Allocation
- Up to 100% allocation in equity
- Cash portion may be invested in:
- liquid funds
- debt securities
Portfolio Construction
A typical portfolio may generally consist of:
- maximum 25 stocks
- diversified sector exposure
Alchemy High Growth (AHG) – Product Highlights
1. Relevant Universe
A relevant universe of approximately 500 companies is identified based on:
- market capitalization
- governance filters
- long-term attractiveness
- ROE profile
- qualitative parameters
2. Investible Universe
The investible universe is created through assessment of:
- revenue growth
- EBITDA growth
- cash flow conversion efficiency
- core ROE
- business-specific variables
Additional evaluation includes:
- management quality
- governance standards
- competitive positioning
Valuation Framework
Valuation analysis may include:
- P/E
- P/B
- EV/EBITDA
- DCF valuation
The objective is to identify acceptable valuation ranges for investment.
3. Portfolio Construction
The Portfolio Manager constructs portfolios from the investible universe based on:
- investment conviction
- portfolio positioning
- valuation comfort
Benchmark
- S&P BSE 500 TRI (effective April 1, 2023)
Basis for Benchmark Selection
As per APMI Circular APMI/2022-23/02 dated March 23, 2023.
Alchemy High Growth – April 2024
Key Highlights
- Group AUM exceeds USD 1.1 Billion
- INR 1 crore invested in May 2002 could have grown to over INR 58.6 crores
- Outperformed benchmark in 14 out of 22 calendar years
- Generated annualized alpha of +305 bps (INR returns)
Alchemy High Growth Performance Highlights
Portfolio Performance Overview
Portfolio Composition & Analysis
Our Investment Philosophy
Long-Term Investing
The investment philosophy focuses on generating:
- consistent long-term returns
- superior absolute returns
- performance across market cycles
The strategy invests in:
- growth-oriented companies
- scalable businesses
- strong management teams
Business Selection Criteria
Preferred businesses generally have:
- large growth opportunities
- competitive advantages
- scalable business models
- higher-than-average ROCE
Management Assessment
Management quality is considered critical.
The framework evaluates:
- business aggression
- governance standards
- capital allocation discipline
- alignment with business outcomes
Tactical Investment Opportunities
While growth businesses form the portfolio core, the strategy may also invest in:
- deep value opportunities
- special situations
- cyclical market opportunities
3I Matrix: Idea, Investment, Intervention
Idea Generation
Investment Process
Intervention: Investment Team
Intervention: Risk Management
Firm Level Risk Management
- Performance pattern analysis
- Dedicated pre-trade and post-trade checks
- Ongoing internal reviews
- Compliance and legal monitoring
- Business risk management by CEO
Portfolio Level Risk Management
- Daily monitoring by operations team
- Monthly benchmark comparison reviews
- CIO review meetings with fund managers
- Monthly contribution analysis
- Portfolio positioning discussions and action plans
Security Level Risk Management
- Sectoral exposure limits
- Individual stock exposure limits
- Ownership monitoring at strategy level
- Position limit monitoring by operations team
Intervention: Investment Committee
Committee Members
- CEO
- CIO
- COO
- Fund Managers
- Business Heads
- Head of Research
Investment Committee Responsibilities
The committee focuses on:
- macroeconomic review
- performance tracking
- contribution analysis
- outlier management
- exception reporting
- priority action planning
Macro View Analysis
The investment team evaluates:
- macroeconomic changes
- microeconomic developments
- future market expectations
Fund Performance Review
Each fund manager reviews:
- portfolio positioning
- macro and micro impacts
- underperforming positions
- event triggers
- corrective actions
Risk Monitoring
An in-depth contribution analysis is conducted to review:
- outperformers
- underperformers
- portfolio positioning
- future action plans
Frequently Asked Questions (FAQs)
What is Alchemy High Growth Strategy?
Alchemy High Growth Strategy is an equity-focused portfolio management strategy designed to generate long-term returns through growth investing across market capitalizations.
What investment philosophy does the strategy follow?
The strategy follows a “Growth at Reasonable Price” investment philosophy focused on identifying scalable businesses with long-term growth potential.
What is the portfolio size?
The portfolio generally consists of up to 25 stocks across sectors.
What benchmark is used for the strategy?
The benchmark used is the S&P BSE 500 TRI.
What is the recommended investment horizon?
The recommended investment horizon is 3–5 years.
Who manages the Alchemy High Growth Strategy?
The strategy is managed by Alok Agarwal.
Final Thoughts
Alchemy High Growth Strategy combines:
- growth investing
- bottom-up stock selection
- top-down research
- disciplined portfolio construction
- active risk management
The strategy focuses on long-term wealth creation through scalable businesses and active portfolio management.
