Renaissance Absolute Return Alpha Portfolio

Fund Snapshot

Fund Overview

Renaissance Alpha Portfolio is a Multicap portfolio which focuses on superior absolute returns over the investment horizon of 3–5 years. It’s a low risk, high quality growth portfolio which delivers superior risk adjusted returns over the medium to long term. The portfolio has stringent filters for stock selection. As a result, the portfolio strikes a right balance between risk, growth, quality and valuation thus ensuring healthy alpha generation. Key portfolio attributes are:

• High Management Quality and Business Leadership
• Companies with Low Leverage and High ROEs.
• Superior PAT growth and FCF generation.

Investment Philosophy

Growth Biased

Focused on investing in Quality business that can deliver sustainable high growth over medium term to long term. Be selective in cyclical business. Risk Management is central to Investment Management.

Sustainable Quality Growth At Reasonable Price (SQGARP)T

Sustainability

Companies with sustainable and durable business models

Quality

Superior quality businesses as demonstrated by Competitive edge, Pricing power, ROE, FCF. Good quality and competent management teams

Growth

Business that can deliver superior growth over medium to long term

Price

Ability to invest at reasonable valuations. Fair value approach to valuations. Focus on economic value of business.

Risk Management

Mortality Risk

Experienced investment professionals to help limit investment universe to carefully select good quality businesses

Volatility Risk

Monitor overall portfolio volatility and control risk class/sector/stock exposures as needed

Risk Management Strategy

The fund managers will strive to manage the following risks:

Quality Risk

• Description: Investing in unsustainable/ weak companies
• Strategy: Experienced investment professionals to help limit investment universe to carefully selected high quality business

Price Risk

• Description: Overpaying for a company
• Strategy: Detailed in-house research to enable “Fair Value” based investment recommendations

Management Risk

• Description: Inability for management to drive growth
• Strategy: Assess quality of team and their focus on creating shareholder value

Financial Risk

• Description: Overleverage or dependent on a critical revenue stream
• Strategy: Monitor overall financial risk and leverage of investee company

Event Risk

• Description: Risk due to company or sector-specific event
• Strategy: Effective and timely response to uncertain events enabled through in-depth understanding of businesses

4 Pillars of Investment

• Philosophy
• Process
• People
• Performance

Investment Process

Investment Universe

Identify companies with sustainable earnings growth potential, credible management & long-term growth prospects

Research Companies

Analyze fundamentals of the company and industry to assess attractive segments within our universe

Stock Selection

Portfolio is constructed bottom-up based on careful analysis and taking advantage of volatility, crisis, or unusual circumstances

Portfolio Management

In order to ensure investment objectives are met, ensure effective governance, active involvement and timely intervention

Stock Selection Process

Size

Business Leadership

Companies with Market Cap >3000cr

Quality

Companies having ROE >15%

FCF positive

Good quality and competent management teams

Growth

PAT growth of 15-20% over next five years

Risk

Reasonable Margin of Safety

Debt/Equity < 0.5