Centrum Flexicap Strategy
Patience is a virtue
Lots of ups and downs, but strong returns over the long-term
Crises cannot be predicted....
Nor their reactions !
Types of Risk
Broadly there are 3 types of equity risks
A - risk of losing all your capital
B - opportunity losses, other stocks/portfolios doing better than ours
C - temporary stock price correction post our purchase
Type A is eminently controllable,
Type B is also controllable to a large extent,
Type C is not controllable at all.
Investors spend maximum time on Type C risk !
Type C risk
Minor consequences
- Trying to ‘time’ the market entry
- Stress-induced trading
- The best stocks get sold too early
Major consequence – smaller allocation to equity asset class.... opportunity loss
Experience of our midcap/smallcap strategy (Deep Value - 1) teaches us that while there will be year-to-year volatility, a lot of money can be made over the long term.
Investing tenets
- Focus on type A and type B risk
- Ensure ‘relevance’ – be aligned with emerging long term trends
- Rising cash flows + Moderate valuation + Patience = Great returns
Why Flexicap ?
Style rotation
- Growth vs Value
- Defensive vs Aggressive
- Consistent performers vs Cyclicals
Market Cap rotation
Over last 15 years, market leadership has changed many times (on a rolling 3 year CAGR basis)
It is important to capture such rotation to improve portfolio performance
CFP - Salient Aspects
CFP - Key Differentiators
- Large Caps reduce volatility and provide medium term growth
- SMID caps provide outperformance
- Combination approach works well over the long term
- Centrum has track record of successful SMID Cap investing
Nimble segment allocation
- Large caps have underperformed in last eight quarters,
- CFP large cap share reduced from 55% in Mar-20 to 31% in Mar-22
Centrum Flexicap Portfolio – July 2022
Exposure to lucrative medium term opportunities
Market cap allocation
Portfolio currently positioned towards smallcap to generate alpha
CFP performance
Portfolio performance – long term
The CFP strategy delivered 14.6% CAGR since inception (net of fees) over the last 10 years
Centrum PMS positioning
Risk-Reward Mapping of Portfolios
EDGE framework
An proprietary framework developed over time shapes the investment approach
Portfolio analytics – CFP
Comparisons with the market (Nifty 50) on key metrics
