SELECT SECTOR PORTFOLIO

Investment Philosophy

Investment philosophy emphasizes investing in businesses that demonstrate the ability and commitment to grow earnings at a rate faster than nominal GDP. Key strategies include purchasing companies at reasonable prices that offer a margin of safety. Investors should target companies with a large opportunity canvas for potential non-linear growth, credible management teams, a strong focus on capital efficiency, and superior return ratios.

In the context of investment strategies, the philosophy outlines a dual approach that incorporates both top-down and bottom-up methodologies. It emphasizes industries characterized by robust operating dynamics, identifying businesses that form the cornerstone of India's growth narrative. The analysis presents opportunities that are not limited by specific sectors or themes, focusing instead on attractive valuations that provide a "margin of safety" for investors.

Investment Objective & Strategy

Wealth Creation Approach

• Recurring Winners - High Quality businesses with consistent growth 
• Companies with Scalability and Resilience
• Benchmark-agnostic
• Mid- & Small Cap oriented Portfolio
• Concentrated Portfolio

Value drivers

• High ROEs/ROCEs
• Sustainable earnings growth
• Low leverage
• High-quality franchise, product, service
• Superior management team

Don’t wait for opportunity—invest in it with AltPort.

4 Pillars of The Investment Process

Concentrated Portfolio | Benchmark agnostic | Predominantly Mid & Small Cap Universe

GDP growth pattern tilted in favor of few industries

• Sustainable growth over medium to long term in select industries

Recurring Winners: Focus on businesses that have consistently created VALUE

• Favorable industry operating dynamics key to wealth creation
• Consistent growth/returns profile, reflected in high ROE/ROCE

Unique strategy based on Superior Screening process

• Extensive research to identify future winners
• Comprehensive alert system to track industry-wide valuations

Value investing approach to generate alpha

• Buy quality businesses at a discount to their intrinsic value
• High margin of safety

Pillar 1: GDP growth patterns favor some sectors more

India’s GDP growth is driven mainly by private consumption, exports, and capital formation—each powering different sectors. When certain sectors grow faster than GDP, they create strong opportunities for higher returns. Historical trends show outperforming themes rotate across cycles—from Industrials and Healthcare to IT and Financials. Over FY23-25, the focus shifts to high-growth areas like Materials, Industrials, and Consumer Discretionary.

Pillar 2: Recurring Winners

Long-term research shows industries with strong operating dynamics, limited competition, and high entry barriers tend to deliver better wealth creation. Sectors such as banks, pharmaceuticals, IT services, capital goods, and FMCG benefit from stable demand, market dominance, and superior business models, leading to consistent growth and strong shareholder returns across market cycles.

Pillar 3: Effective Screeners Backed by Research

Superior stock selection relies on deep fundamental research to identify sustainable winners early. A rigorous bottom-up approach, including industry analysis, company meetings, dealer checks, plant visits, and financial evaluations, builds conviction. Focus remains on growth sectors at reasonable valuations, tracking changing dynamics to stay ahead and invest in companies with long-term potential.

Pillar 4: Attractive Valuation with “Margin of Safety”

Pillar 4 emphasizes the importance of acquiring quality growth stocks at a price lower than their intrinsic value, assuring a "Margin of Safety." It highlights the use of proprietary screeners to identify undervalued stocks posited to generate substantial medium- to long-term value. The investment strategy underlines the necessity of ensuring a visible minimum threshold return alongside limited downside risks before committing to a company.

Portfolio Structuring

Industry Allocation

Market Capital

• Large Cap - 8%
• Mid Cap - 52.8%
• Small Cap - 8%
• Cash - 7.6%

Top 10 Holdings & Weights

Portfolio Characteristics

Asset Management

Heritage

• Founded in 1994, it is one of the oldest in India
• Promoted by Aditya Birla Capital Group Life Financial
• Have seen the market evolve across different asset classes over the years
• Driven by client-centric Product Innovation
• International presence in Dubai, Singapore, and Mauritius.

Market Dominance

• One of the top AMCs in India with MF AUM of over 3,94,663 Cr (May 2025)
• Over 10.6 million investor accounts (May 2025) Strengths across different asset classes

Alternate Business

Best-in-Class Management

• Offer portfolio management services and alternate & offshore investment solutions to HNIs and Institutions
• Managing/advising Rs. 43,200 Cr of assets as of June 2025, with a 16-member dedicated investment team for Equity, Fixed Income and Real Estate, with a cumulative experience of 100+ years
• Focus on delivering sustained investment performance and portfolio differentiation.
• Strong and robust risk management and governance framework

Invest smart. Stay confident. Trust AltPort Funds.

Portfolio Construction Process

• Investment Universe: Defined by the portfolio universe as per the fund mandate.
• Investor Servicing: Involves managing fund performance, reporting, and facilitating investor servicing.
• Monitoring: Includes periodic monitoring, setting stop-loss triggers, and maintaining sell discipline.
• Stock Screening: Comprises financial modeling and due diligence with both quantitative and qualitative screening tools.
• Portfolio Optimization: Focuses on risk-reward analysis and overall portfolio optimization.

Investment Process - Screening & Monitoring

Fundamentals:

Fundamentals include a target return on equity exceeding 15% and a net debt to EBITDA ratio of less than 2x.

Improving Margins & Turnover Ratios:

- Focus on Aggregate Portfolio liquidity

Valuation:

Valuation focuses on achieving superior EPS growth, enhancing Return on Capital Employed (RoCE), and maintaining a better Net Debt to EBITDA ratio compared to benchmarks, while also identifying large opportunity canvases.

Governance:

Governance involves assessing the conduct of promoters and the integrity of management, being alert to accounting red flags and high pledge levels, as well as monitoring limited equity dilution in recent history.

Financial Modelling & Due Diligence:

Financial modeling and due diligence focus on achieving a compound annual growth rate (CAGR) of over 15% in the medium term while maintaining a competitive advantage through a unique value proposition. Furthermore, it involves engagement with investee companies and their ecosystems.

Stop Loss Triggers:

Trigger if stock loss exceeds benchmark by more than 30% over the trailing 6 months

Periodic Monitoring:

Periodic monitoring should occur quarterly, alongside the implementation of event-based triggers.

Maintain Sell Discipline:

To maintain sell discipline, it is essential to identify poor capital allocation, recognize weakening competitive positions, and address any emerging governance issues.

Choose skill. Choose SOUL. Choose AltPort!

At AltPort Funds, our investment philosophy, SOUL, stands for Skilled Outperformance while avoiding the pitfalls of Underperformance and Luck-based investing. SOUL means that we build success on expertise, not chance. We carefully select funds, looking for managers with proven skill and lasting strategies, which ensures value growth. Skill always comes before luck. Enduring performance comes from insight, not impulse. With AltPort Funds, you can invest with the confidence that skill meets opportunity, which gives you reliable outperformance.