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Last week We covered few charts that provided insights on upcoming cycles and identified shift in today’s market landscape. This week, we’re writing about the recent decision from our Fund Manager’s desk regarding additional capital allocation and our considerations regarding where to allocate this capital. Starting CY24, we had spoken about the year being volatile in terms of prices alongside CY24 being a good year to construct portfolios. In line with this, as we begin to see early signs of volatility in the markets, we want you to consider allocating additional capital into your client’s portfolio.

What we have been doing :

Over the last few months, we have exited multiple positions in our portfolio. Many of them are full exits and some of them have been partial exits to trim our weights and reduce risk and raise cash in the portfolio. Our endeavour has always been to constantly match the growth in the portfolios we construct to the price we pay to own them. When this balance is hard (where we need to pay a significant premium to own growth) is when we tend to own cash in the portfolios.

Why a capital call now and how are we thinking through risk

There has been an increased volatility in the markets, and we expect this to continue over the next 3-4 months. From our seat, we aim to address our thought process on how we would be allocating additional capital.

We expect the volatility to increase broadly driven by flows and liquidity reducing vs what we saw in 2023. We would want to be buyers of risk into this volatility. Broadly we expect to deploy additional capital over the next 3-4 months with a bias across the following sectors : Cap Goods, Power, Pharma, Select consumer and Auto. Our allocation will continue to favour GDP facing beneficiaries and we would continue to be underweight lending financials with little/no exposure in NBFCs.

We do not believe the growth of the portfolio is yet at risk. Today, the portfolio continues to grow at a robust 18% on an earnings basis if the volatility increases, and believe we will get good entry points for us to fully get deployed.

We have done these calls in the past and received a great response from our investor and partners in additional capital allocation, if you would like to know more about our capital call process, do click on the link below-



Also, we keep writing to you about our SIP program that presents investors with a convenient avenue to regularly infuse capital into their portfolios. Feel free to check out the benefits for your clients. If you need more info, reach out to your dedicated relationship manager at [email protected].

These weekly episodes are now available in our website for your quick read and you may access the same in the below link.

Weekly Enlightenment Archives – ITUS Capital