Predictable India
India is already >4% of global GDP and is likely to become the 3rd largest economy in the world over the next 10 years. This has and will continue to create opportunity for investment across asset classes and sectors.
Since 1980, when India opened up, the Indian real GDP growth has averaged 6.2% per annum. This is across governments of the left and right; single party or coalition governments and across economic booms and shocks. That real gdp growth leads to a double digit growth in nominal GDP in a predictable manner. The structure of the Indian economy and its activity dominated by private individuals and small and large companies is then able to convert that nominal gdp to revenues and profits.
The beauty of the Indian stock market is that this growth in nominal GDP and in corporate profitability is predictably reflected over time in stock market returns. Even in US Dollar terms.
See this slide presentation to understand why this is so in India, and why this predictable link between GDP growth and Equity returns is not true in some other comparable economies.
Q India Value Equity Strategy
The Q India Value Equity Strategy has a track record going back to July 2000. Its goal is to generate sensible and predictable returns in a liquid, scalable, high-governance portfolio, which is built with a margin of safety.
The disciplined, team driven research process filters for stock liquidity, removes companies which do not meet our management integrity screen and then looks for margin of safety in valuations.
We value stocks on a rolling 2 or 2.5-year forward basis on a normalised median valuation.
We then try to buy at a minimum 25% discount to that forward intrinsic value. So if we are right, the upside potential over a 2 year period = 25/75 = 33.33% over 2 years = 15.5% CAGR on a gross basis. When the stock goes above its intrinsic value, the portfolio team will trim/exit the stock.
It is indeed remarkable how this process results in a predictable portfolio outcome over such long time periods.
Quantum India Value Equity Strategy through this team-driven, disciplined, bottom-up, proprietary stock selection process has thus generated 13.8% CAGR in US Dollars (as of the end of August 2024), net of fees since August 2000. (The BSE-500 TRI Index (benchmark) returned 12.8% during the same period).
Disclaimer :- Past performance does not guarantee and is not indicative of future results.
Q India Value Equity Strategy Composite (QIVEC) Inception Date is considered as August 01, 2000, as per Quantum’s internal performance computation policy and procedures. Please refer slide 14 for detailed performance of QIVEC.
The returns of QIVEC computed in accordance with SEBI guidelines, as applicable from time to time and the computation methodology prescribed in the SEBI guidelines are given in Annexure 1 at the end of the above slide presentation.
Please refer to the Disclaimer – Terms of Use at the end of the slide presentation for important disclosures and disclaimers.
For detailed description of QIVEC such as investment objective, assets allocation pattern, investment strategy and philosophy, associated risk factors and other details please refer to the Disclosure Document available at https://www.qasl.com/disclosures.
