Series 63 – Benchmark Vs and Portfolio composition

The previous week, we highlighted our risk mitigation strategies, where we use 5 levers to manage risk in the portfolio construction. This week we are re-emphasising our portfolio composition versus Benchmark and how we have deviated heavily from the index and our outlook.

The below chart gives you a fair idea on how the ITUS portfolio behaves a contra portfolio compared to the index, which means we have intentionally targeted growth sectors that are showing strong earnings and margin expansions. We believe these sectors are poised to benefit from favourable economic conditions.

1. Auto – We see margins expanding and currently in the 3^rd year or cycle and hence bottom up positioning for us is extremely important and our portfolio is overweight in this segment.
2. Capital Goods – Here too we see are margins expanding and looking at a bottom up positioning and we have a 9.5% exposure here.
3. Pharma & Healthcare – Margins are expanding and continue to see signs of volume growth, hence we are overweight in this sector compared to the benchmark at 6.5%
4. Power – With capacity expansion in thermal and renewable, we see a trend on the growth of power consumption and are invested in players with larger market share.5% allocation has gone into power.
5. Banking – We notice RoA compression and we believe the margin pressure will continue, though valuations are relatively okay. We would rather place us in better pockets of growth than banking today (7.5%)
6. IT – Do not show strong earnings growth and we don’t see volume growth picking up and we are underweight in this segment. (5.5%)
7. FMCG – Also do not portray strong earnings, and we believe valuation area expensive and we continue to be underweight here.(4.5%)

These data gives us an understanding of how the ITUS portfolio is different from typical benchmark hugged portfolios and how diversification becomes key in this kind of market. It emphasizes the importance of diversification, especially in a dynamic market like this. This unique positioning allows us to confidently request allocations from investors seeking a differentiated strategy.

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