Dynamo

What Is the AccuraCap Dynamo PMS?

AccuraCap Dynamo PMS is a discretionary, long-only Portfolio Management Service focused on small- and micro-cap companies in India. The strategy uses a proprietary Artificial Intelligence-driven algorithm to identify companies based on business growth, valuation, earnings quality, balance-sheet strength and price momentum.

Dynamo began on 31 December 2016 and uses the S&P BSE 500 TRI as its benchmark. Based on the reported performance figures available for the strategy, Dynamo delivered a cumulative return of 602% since inception versus 273% for the benchmark, as of the stated reporting period.

The strategy is designed around a systematic ranking framework rather than short-term market timing. It combines fundamental and technical parameters with spatio-temporal analysis to rank companies and construct the portfolio. As a small- and micro-cap-oriented strategy, Dynamo can experience substantial volatility and drawdowns, making the risk profile an important consideration for investors evaluating the portfolio.

AccuraCap Dynamo PMS: Fund Snapshot 

Dynamo focuses on a relatively concentrated universe of smaller companies and follows a long-only approach. Its portfolio construction is driven by the AccuraCap ranking framework, with periodic rebalancing based on changes in stock rankings.

The strategy's reported AUM and portfolio composition can change over time. Investors should refer to the latest product disclosure for the current AUM, holdings and allocation details.

How Does AccuraCap Dynamo PMS Select Small-Cap Stocks?

Dynamo uses a proprietary quantitative framework to rank companies within its investment universe. The approach combines Artificial Intelligence-driven analysis, GARP (Growth at Reasonable Price), fundamental research and technical parameters.

The objective is not simply to identify companies with the fastest growth. Instead, the framework evaluates growth in relation to valuation, financial strength, earnings quality and market behaviour.

Proprietary Ranking Algorithm

The ranking algorithm was backtested using historical data from 1999 and has been used in live markets since 2009. It evaluates a broad set of financial and market variables before assigning rankings to companies.

The framework considers:

• Business growth and earnings trends
• Core earnings and cash-flow generation
• Valuation relative to peers, the broader universe and historical levels
• Balance-sheet strength
• Solvency and liquidity
• Return on capital
• Stock-price momentum
• Corporate governance
• Quality of reported earnings

GARP: Growth at a Reasonable Price

The strategy incorporates the GARP — Growth at Reasonable Price concept. This means the investment framework considers a company's growth prospects alongside the price investors are paying for that growth.

A rapidly growing company may not necessarily qualify if its valuation is excessive. Similarly, a cheap stock may not qualify if its underlying business fundamentals are deteriorating.

20-Quarter Trend Analysis

AccuraCap evaluates longer-term trends rather than relying exclusively on the latest quarterly result. Revenue, core earnings and cash-flow trends are assessed across 20 quarters, with adjustments for seasonality.

This helps the ranking framework distinguish between temporary movements and more persistent changes in business performance.

Three-Stage Investment Process

Stage 1: Reported Earnings

The process begins with reported financial information. Companies undergo:

• Data filtering
• Data scrubbing
• Quality-of-earnings analysis
• Corporate governance screening

The objective is to establish whether reported numbers provide a reliable foundation for further analysis.

Stage 2: Core Earnings and Balance Sheet

The next stage focuses on underlying business performance and financial strength.

AccuraCap uses a large set of data points and spatio-temporal ranking to evaluate companies across different periods and dimensions. Core earnings, margins, balance-sheet quality, liquidity and return metrics form part of this assessment.

Stage 3: Ranked Universe and Portfolio Construction

After companies have been ranked, the higher-ranked stocks form the basis for portfolio construction.

The process is systematic, although actual investor portfolios can vary because PMS accounts are maintained separately and may be subject to individual account-level considerations.

AccuraCap Dynamo PMS Investment Universe and Portfolio Construction

Dynamo operates within a universe of approximately the top 500–800 companies by market capitalisation, with a focus on smaller companies. The strategy follows a long-only approach and typically maintains a portfolio of around 30–40 stocks.

The portfolio is generally kept substantially invested rather than relying on market-timing calls. Stocks are periodically reassessed according to their rankings, and lower-ranked companies may be replaced by higher-ranked names.

This creates a rules-based rebalancing framework rather than a portfolio built primarily around discretionary short-term calls.

Small- and micro-cap investing also comes with specific risks. Smaller companies can have lower trading volumes, wider bid-ask spreads and greater sensitivity to changes in business conditions. Quantitative models can also face model risk when market conditions differ significantly from historical patterns. The algorithm therefore does not eliminate equity-market, liquidity or business risk.

AccuraCap Dynamo PMS: Fees, Minimum Investment and Exit Load

The minimum investment for Dynamo PMS is ₹50 lakh.

The reported fee structure includes a choice between a fixed management fee and a performance-linked structure. Investors should confirm the applicable commercial terms before onboarding.

The 14% hurdle rate is specific to the Dynamo fee structure and should not be confused with hurdle rates applicable to other AccuraCap strategies.

The performance-linked structure involves profit sharing only above the stated hurdle, subject to the applicable agreement and fee terms. Actual charges should always be checked in the latest PMS agreement and product documentation when comparing PMS strategies.

AccuraCap Dynamo PMS Portfolio-Top Holdings and Sector Allocation

The portfolio is actively rebalanced according to the strategy's ranking framework, so individual holdings and their weights can change over time.

Top Holdings

Portfolio weights are based on the reported portfolio data provided for the strategy and should be treated as date-specific.

Market Capitalisation Allocation

The allocation demonstrates the strategy's strong concentration toward the smaller end of the equity-market spectrum. Consequently, investors should account for the potentially higher volatility and liquidity risks associated with small- and micro-cap stocks.

Risk Analysis

The reported 26% standard deviation indicates materially higher historical volatility than the benchmark's 17%. The Sortino and Sharpe ratios provide additional measures of historical risk-adjusted performance, but neither metric guarantees similar outcomes in future market conditions.

Who Should Invest in the AccuraCap Dynamo PMS?

AccuraCap Dynamo may be considered by investors who meet the PMS minimum investment requirement of ₹50 lakh, have a high tolerance for equity-market volatility and can remain invested over a longer time horizon.

The strategy's focus on small- and micro-cap companies means investors should be prepared for sharp interim declines. Historical data includes drawdowns of 25% in 2018 and 30% in 2019, alongside substantial recovery years.

Dynamo may therefore be more relevant to investors seeking exposure to a systematic small-cap strategy and who understand the additional liquidity, valuation and business risks associated with smaller companies.

What Can Investors Expect from This Small and Micro-Cap PMS?

Investors in Dynamo should expect a portfolio driven primarily by quantitative rankings rather than short-term market predictions.

Historical results show that the strategy can experience significant volatility. Its 26% reported standard deviation is higher than the benchmark's 17%, while past calendar-year returns show substantial variation.

The same historical record includes strong recovery years, including 64% in 2020 and 65% in 2023. However, these figures should not be interpreted as an expectation of future performance.

Portfolio changes are driven by the ranking process, with lower-ranked stocks potentially being replaced by higher-ranked stocks. As with any quantitative strategy, model limitations, changing market regimes, company-specific events and liquidity conditions can affect results.

How ALTPORT Helps Investors Access AccuraCap Dynamo PMS

ALTPORT provides investors with access to information and onboarding support for PMS strategies, including AccuraCap Dynamo.

As a distributor, ALTPORT can help investors understand the strategy's structure, minimum investment, historical performance, fee framework and risk characteristics before proceeding.

For investors comparing options in the small-cap PMS India segment or evaluating a micro cap PMS India strategy, understanding the underlying investment process is particularly important. Dynamo's quantitative approach, concentration in smaller companies and higher historical volatility should be evaluated alongside an investor's overall portfolio and risk tolerance.

ALTPORT's role is to facilitate access to product information and onboarding; AccuraCap remains responsible for managing the PMS portfolio.