Series 82 – Quarterly Letter Highlights – ITUS Capital Fundamental Value Fund

Our fund has consistently delivered an IRR of 21.8% over the past 7.9 years.  At ITUS, we strive to maintain this stability for our investors, handling volatility first and returns being consequential. We focus on aligning to the fundamental behaviour of the fund that drives our consistent return.

This week, we are attaching our quarterly letter from our Fund Manager’s desk. Below are the key highlights that we have covered in the letter –

1. Strategy: We focus on identifying quality companies, disciplined capital allocation, and robust risk management, with a strong bias towards large-cap companies.
2. Market Positioning: The portfolio is heavily weighted towards Pharmaceuticals, Auto, Consumer Staples, Power, and Insurance, providing a hedge against the market’s tilt towards banks.
3. Key Market Drivers: Returns are expected to be shaped by earnings growth, liquidity, and valuation. Currently, all three factors are robust, supporting the market.
4. Earnings Growth: Strong earnings growth in the Indian market is driven by fiscal prudence and disciplined capital allocation, leading to expanding RoE
5. Liquidity: Both global and domestic liquidity are strong. The Fed and China are maintaining easy liquidity policies, while India’s inflation remains benign, supporting market liquidity.\
6. Valuations: Indian market valuations are above the mean but justified in certain sectors. Mid-cap and small-cap valuations are particularly high, trading at a 2-standard deviation above the mean.
7. Sector Focus: The fund has increased its exposure to the Power sector due to recent capex and transmission capacity expansions. It has also significantly increased its allocation to Consumer Staples, particularly in rural consumption. Factors such as higher farm realizations, increased MSPs, welfare schemes, and strong domestic 2W sales are expected to drive recovery in rural consumption. The fund is positioned in ITC and Marico to capture the expected changes in rural consumption and other growth areas.

These highlights capture the key points and strategic insights from the article. To read the complete letter please click on this link – Itus Capital 3Q Letter 2024

Also, we have our quarterly call on the 12th of October (Saturday) at 9:30 AM. Please register now if you still haven’t –

Webinar Registration – Zoom

We also keep writing to you about our SIP program that presents investors with a convenient avenue to regularly infuse capital into the client’s 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