Aionios Alpha Fund I

Stocks to Own Today

• Selected based on the best risk–reward trade-off
• High conviction ideas with immediate allocation

Watchlist – Stocks to Own Later

• Companies with strong potential but not immediate entry points
• Typically tracked due to:
  • Unattractive current valuations
  • Need for a few more quarters of performance clarity
  • Early signs of a turnaround still playing out

Stocks to Avoid

• Typically excluded due to:
  • Weak corporate governance
  • Poor or unsustainable business models
  • High disruption risk
  • Excessive leverage leading to existential concerns

Ongoing Monitoring

Stock-Level Tracking

Continuous tracking is maintained at an individual stock level through:

• Reviewing transcripts of quarterly earnings calls
• Periodic interaction with company management when required
• Monitoring competitors, suppliers, and customers through their earnings calls
• Studying industry journals, datasets, and customer feedback trends
• Tracking global peers and comparable companies
• Setting price alerts (including global benchmarks)
• Participating in trade shows and industry events
• Engaging in industry visits and broker-organized field trips

Portfolio-Level Oversight

At the overall portfolio level, monitoring is conducted regularly (monthly or upon any major change):

• Tracking correlation across portfolio holdings
• Monitoring portfolio beta
• Running sensitivity analysis based on macro variables such as:
  • Interest rates
  • Currency movements
  • Commodity prices (e.g., crude)
• Setting thresholds for position sizes
• Rebalancing when allocation limits are breached

Risk Discipline

Strict discipline is maintained to protect capital:

• Positions are reviewed if the investment thesis breaks
• Action is taken if the risk–reward equation deteriorates significantly

Risk Management Framework

• A strong emphasis is placed on maintaining discipline throughout the investment process, ensuring consistency in decision-making across market cycles.
• Portfolio construction is designed to maintain low correlation between holdings, especially important given the concentrated nature of the strategy.
• Liquidity is a key consideration. Even within an all-cap approach, stock selection accounts for the ability to enter and exit positions efficiently.
• Position sizing plays a critical role in risk control. It is actively used to limit the impact of inevitable drawdowns or stock-specific setbacks over time.

How It All Comes Together

• The portfolio is deliberately concentrated, typically comprising around 20–25 stocks, allowing for meaningful exposure to high-conviction ideas.
• Investment selection follows a bottom-up approach, remaining agnostic to market capitalization and benchmark constraints.
• A minimum investment horizon of three years is maintained. This enables deeper research, stronger conviction, and participation in less crowded opportunities.
• Given the concentrated structure, top holdings are carefully chosen to have idiosyncratic growth drivers with minimal overlap or correlation.
• The long-term, patient approach allows the strategy to capitalize on market volatility, using it as an opportunity rather than treating it purely as a risk factor.

Differentiated Stance in BFSI

At Aionios Alpha, the approach to the Banking, Financial Services, and Insurance (BFSI) sector is fundamentally distinct from standard benchmark compositions. The firm maintains that true alpha is generated through a selective, bottom-up approach rather than broad index tracking.

Concentrated vs. Broad Market Exposure

• Nifty 50 Composition: The Nifty index is heavily weighted toward the BFSI sector, maintaining an exposure of approximately 37%, largely dominated by large-cap private banks.

• Aionios Alpha Portfolio: In contrast, the fund maintains a much more concentrated and lower exposure of 15% to the BFSI sector. This enables the firm to avoid areas where the risk-reward profile is not deemed compelling, specifically within certain large private banking institutions.

Strategic Focus

Rather than following the index, Aionios Alpha prioritizes high-conviction names that offer:

• Robust Return Ratios: The team identifies businesses with superior capital efficiency and profitability metrics.

• Significant Opportunity Size: The fund focuses on segments with a massive Total Addressable Market (TAM), providing a long runway for growth.

• High Upside Potential: The portfolio is curated to include specialized financial players—such as those in Fintech (5%), Microfinance (4%), and NBFCs (4%)—where the firm sees the greatest potential for outsized returns.

Portfolio Breakdown

Sector weights