NAFA INDIA EMERGING BLUE CHIP TRUST

Investment Philosophy

NAFA’s investment philosophy revolves around creating benchmark-agnostic, concentrated portfolios of quality stocks. Their strategy is built on a “bottom-up” stock-picking process supported by a top-down macroeconomic perspective.

Core Pillars of their Investment Process:

• Quantitative Screening: They prioritize companies with high growth potential, high Return on Capital Employed (ROCE), strong cash flow conversion, and low leverage.

• Qualitative Assessment: The team rigorously evaluates corporate governance, promoter track records, and promoter share pledges. They actively monitor company notifications and consumption patterns to identify businesses gaining market share.

• The “Science & Art” Valuation: They utilize a blend of fundamental analysis and valuation discipline to ensure they are not overpaying for growth, aiming for a significant margin of safety.

• Portfolio Construction:

  • Concentrated Bets: Portfolios typically feature a limited number of high-conviction stocks (e.g., 20–25 in their flagship strategies) to avoid the return dilution associated with over-diversification.

  • Active Management: They are willing to take active sector, stock, and cash calls based on market conditions.

  • Long-Term Horizon: They follow a “Buy and Hold” approach, typically looking at an investment horizon of 5–7 years to allow for the compounding of wealth.

Strategic Mindset

• “We grow together with our clients”: This motto underscores their focus on nurturing close relationships and creating solutions tailored to sustainable, long-term returns.

• Challenging the Status Quo: The firm proactively monitors global trends and international companies to identify emerging themes that may eventually be replicated in the Indian market.