360 One Multi Strategy Fund

Fund Snapshot

Unique Feature

Optimal Portfolio Selection

• Portfolio selection based on in-house expertise
• Disciplined investment implementation
• Diversification across market caps

Continuous Monitoring

• Allocation based on internal evaluation & change in macroeconomic outlook
• Ongoing portfolio evaluation by the highly experienced investment team

Flexibility

• Flexibility to modify allocations dynamically with market changes
• Cost effective as all changes are in same portfolio and not different schemes

Investment Process

• Theme Selection
  • Selection of different themes based on internal research, evaluation and macro-economic factors

• Advisor Selection
  • Appoint Advisors with strong track record for providing research and non-binding advice
  • Leverage 360 One group’s network to access the best advisors

• Portfolio Construction
  • Allocation across various themes by 360 One AMC investment team
  • Min allocation to a single theme: 20%
  • Max allocation to a single theme: 40%

• Ongoing Monitoring
  • Ongoing review of portfolio and regular rebalancing to capitalize on changing macro-economic conditions

PORTFOLIO CONSTRUCTION

Combining Stocks under 360 One AMC coverage and Research Ideas from Advisors, 360 One Investment Team Shortlists stock ideas from combined pool. Then the final portfolio comes with a diversification across market cap including 40 to 50 stocks

PORTFOLIO POSITIONING – ALLOCATION ACROSS MARKET CAPS

Constant rebalancing based on macro-economic environment and performance of above strategies. The investment manager shall be responsible for theme review and allocation

• Multicap

Financials, Banks, Consumer Discretionary & Insurance

• Large/Mid Cap

Financials, Consumer Discretionary, Auto/AutoAncillaries & Retail

• Small Cap

Consumer Discretionary, Pharma, Financials & Logistics

Large/Mid Cap Research Process

• HISTORY: Historical performance of the company is tracked for investment purpose. Usually 11 years is a credit cycle where GDP has gone up, down and drifted. Factors that are considered for evaluation include positive cash flows across various periods and valuations
• BUSINESS MODEL: Unique business models that provide an insight into the economic moat or competitive advantage of the company
• VOLUME GROWTH: Articulate what are the structural drivers for the volume growth of the company for the next few years
• MANAGEMENT INTERACTION AND CHANNEL CHECKS: Good history and the reason why the company is poised to grow is the output of the business owners thought process and interest. Identification of the person responsible for the company’s future & find out if his interests are aligned for future growth. Channel checks provide an insight into culture of the company
• VALUATIONS: A portfolio that is cheaper than the index at an EV/Operating Cash Flow metric

Investment Focus

Long term wealth creation by investing in a portfolio of non-cyclical companies which will experience sustainable volume/earning growth over the long term and lower drawdowns during market correction

• Extensive Research
• Forensic Analysis of Books
• Data Driven Approach

Investment Philosophy

360 One Multi Strategy fund aims to invest across three investment themes viz the multicap, large/mid cap and small-cap. This is category III closed-ended alternative investment and the minimum ticket size is rupees one crore.

Multicap Research Process

Selection Philosophy

• Clear and SustainableBusiness Model

Easy understandable business model catering to large market. Resilient over market cycles

• Alignment of Interest: Promoter Stake

Sizeable promoter’s stake in the company, adequate corporate governance, & quality of management

• Position vs Peer Group

Consistent growth rates of 12-20% CAGR; outperform industry peers by a wide margin

• High Operating Metrics

Return On Equity > 15%, Return on Invested Capital >10%, Debt to Equity < 0.5x and low earnings volatility

Valuation

• Growth at Reasonable Price
• Companies growing at minimum 12-20% CAGR both in revenue and earnings
• Trading at a reasonable valuations (PEG ratio close to 1x)

Margin of Safety

• Companies at prices which provide a margin of safety and have limited downside
• The difference between the intrinsic value of the stock and its buying price should be substantial to justify that we purchase it at the prevailing price
• Risk – Return Payoff
• The risk-return payoff should be favourable in the ratio of 1:3 for downside : upside

Investment Focus

With limited options to invest savings, flows into financial instruments will see exponential growth Demand from large middle class base from Tier-B cities and rural India to drive growth Well capitalized Financial Institutions to take advantage of the cyclical turnaround opportunity

Small Cap Research Process

The 5S Framework

• Simplicity: Simplicity of the business model
• Scalable: Ability to substantially scale operations
• Sound: Sound promoters & management, good corporate governance
• Sustainable: Ability to maintain competitive advantage
• Strong: Strong and robust return ratios

Investment Focus

• A diversified portfolio of 12-18 growth oriented reasonably valued stocks
• Bottom up approach in stock selection
• Small cap stocks – 251st company onwards in terms of market capitalization