Omkar’s Portfolio Analysis and Discussion

Some initial thoughts on new fund houses – Whiteoak and Helios

To start with, I believe its very difficult for a direct equity investor to be a good mutual fund investor because direct equity investor has strong prejudices. Any analysis on mutual fund portfolio/ strategy is almost always done through that prejudiced lens which many times do not appreciate the fact that equity market rewards multiple strategies/frameworks if executed well

With that disclaimer, following are my initial thoughts on both of these fund houses after going through factsheets and other material available on the website

Whiteoak
The key tenets of their strategy is not too much focus on particular style, sector and market cap because they believe constructing balanced portfolio with blend of these factors which can help improving consistency in the performance. if I look at their portfolio, following points stand out

1. Large diversified portfolio. There are 108 stocks currently in flexi cap fund
2. Having higher allocation to small mid cap as they believe it gives them allocation lot of sector which are not represented in NIFTY. Small mid cap allocation is around 40% which is way higher than category in flexi cap
3. Entire portfolio construction, sectoral weights and small mid cap tilt is based on bottom up research. That means they view portfolio construction as a function of stock selection and not based on economy/market/sectoral cycle we are in
4. Stock selection is biased towards buying high ROCE businesses with discount to intrinsic value which is defined by cash flows. I see less representation of PSU, defence and railway sectors etc. sectors which has low cash flow conversion

Initial judgment –
I really liked the portfolio construction approach, i also find communication about portfolio strategy very clear and something I can measure over cycle. I havent compared their strategy with other fund houses yet. I will keep this thread updated as and when I do that analysis

Helios
I personally did not understand what exactly is their portfolio strategy which they have termed as a “Bar-bell” strategy. To me, their is no unique attribute which stands out from their investment framework. Above all, I can not relate with their campaign ‘Har term ke liye’ which I am attaching below. I dont want fund manager to focus on near term returns because thats a job of financial advisor according to me ( my prejudice is already speaking )