Marcellus Investment Managers Pvt. Ltd. has made three times the Sensex returns in three months in a volatile market for equities. And that made it one of India’s best manager of money for the rich so far this year, second only to Clubmillionaire Financial Services Pvt. Ltd.
The portfolio manager, promoted by Rakshit Ranjan and Saurabh Mukherjea, returned a gain of 23.9 percent in last three months, taking its assets to Rs 557.7 crore as of October, according to data compiled by BloombergQuint from disclosures made to the market regulator. That compares with the average return of 7.93 percent by the top 60 portfolio managers and 7.1 percent by the benchmark Sensex.
Marcellus Investment has HDFC Bank Ltd., Bajaj Finance Ltd. and Kotak Mahindra Bank in its portfolio that comprises 13 stocks. Of these, four are not part of the BSE 100 Index. After the lenders, the home building segment—that includes paintmakers (Asian Paints Ltd. and Berger Paints Ltd.) and an adhesive company (Pidilite Industries Ltd.)—has the highest weight in the portfolio. Other stocks include a drugmaker, a pathology firm and three companies from the discretionary goods space.
“The lenders account for 27 percent of the portfolio, which is backed completely by earnings growth of the companies,” Ranjan, founder and fund manager at Marcellus Investment Managers, told BloombergQuint.
“The earnings growth for our portfolio companies in 2019-20 will be 30-32 percent after the corporate tax rate cut (July - Sept), compared to 17 percent in the first quarter and 18 percent in 2018-19.”
In comparison, the Nifty index, according to him, is expected to grow 5-6 percent in the ongoing financial year against 1-1.5 percent last year.
Marcellus Investment’s stock picks have so far defied the uncertainty in an equity market that has remained volatile since September last year, after the collapse of the IL&FS group. Global trade tensions, a now rolled back tax surcharge on foreign investors, falling consumption and a slowing economy further dented sentiment. But the government’s surprise corporate tax cuts helped erase some of the losses and the indices bounced back.
It’s earnings growth that drives share prices and the price-to-earnings multiple has no co-relation with stock prices, Ranjan said. Thus, Marcellus Investment, he said, continues to invest in the companies in its portfolio irrespective of a rally in their stock prices. “We see a compounded annual growth rate of 20-25 percent for the earnings of our portfolio companies over three-four years.”
The portfolio manager ended October with a 5.2 percent gain. Its assets under management crossed Rs 600 crore in the first week of November. That comes as most companies either met or beat operating income estimates halfway through the second-quarter earnings season.
Marcellus Investment has 750-800 high networth and ultra-high networth clients, with an average investment of Rs 75 lakh. It has an investment horizon of 10-12 years and its current churn rate is 5 percent, Ranjan said.
How The Rest Fared
The average return of top 60 portfolio managers—that collectively manage Rs 1.25 lakh crore of investor money—stood at 2.5 percent in October. The broader market, too, witnessed some buying last month.
In terms of average returns, the portfolio managers outperformed the Sensex 13 times in 22 months.
Last month, 13 portfolio managers outperformed the Sensex.
Here below is a detailed view of the performance of top 60 portfolio managers in October.
(An earlier version of this story has been corrected to show that Marcellus Investment Managers is the second-best PMS so far this year. Clubmillionaire Financial Services is the best performer.)
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