ABM Core & Satellite Portfolio – May 2019 May Review

ABM Core & Satellite Portfolio: An assessment of portfolio performance

For the month of May India was the second best performing market (Nifty +1.5%) amongst large economies, being second
only to Russia (Russian Index up 3.1%). Globally, however, equities saw deep cuts (S&P -6%, HK -10%, MSCI EM -8%), as trade
war fears played out beyond brinkmanship with US imposing tariffs of 25% on Chinese imports worth $200bn. The mid-caps
and small-caps fared in line with large cap index for the month (Nifty +1.5%, Midcap Index +2.2%, Small-cap Index +1.2%).
Indian outperformance as compared to global peers was in part due to the election overhang getting over and a strong
mandate for the incumbent govt. Moreover, India’s external situation too improved with oil falling nearly 12% in May alone
and 20% from its recent peaks. Portfolio flows for the month of May remained positive with equity flows coming in at ~$1.2bn
and debt flows coming in at $0.5bn. Globally, in general, EMs outperformed DMs (Indonesia -4%, Russia +3%, Brazil +1%, while
US was -6%).

The highlight for the month of May was the election verdict delivered by the Indian voters. The ruling incumbent party came
back to power with an even bigger majority breaking many electoral records in the process. Globally, trade war rhetoric has
gotten louder and even resulting in some actions. Global growth has certainly seen some cool off but central bankers globally
remain highly vigilant and willing to support growth. The high frequency data across the world (Global PMI, IIP and jobs data)
is pointing to a synchronous slowdown. Slowing global growth is amply reflected in global commodity prices, with industrial
commodities like Crude, Copper and Zinc all falling between 5%-15% in May. In fact, iron ore (+55% YTD) is the only major
commodity which has risen YTD.

As far as Indian equity markets were concerned, sectoral performance was fairly divergent with Banks (+5.4%), PSBs (+6.3%)
and PSEs (+2.7%) on the winning end and Pharma (-10%), Metals (-6.1%) and IT (-3.3%) being on the losing side. The
midcap/smallcap segment of the market, while being in line with the Nifty for the month, have underperformed YTD (Nifty
+10% YTD, Midcaps +0.5% YTD and Smallcaps +1.5% YTD). Meanwhile, Indian 10 year yields fell further and breached 7% mark
on the downside. Also, economic data continues to be soft, especially on the consumption side. Auto sales have remained
weak even for May (de-growth between 5% - 15%) after an already weak April. Core Sector grew in April for second month on
the trot (April +2.6%, March +4.9%) after falling for three months on the trot. Domestic air traffic de-grew (-0.5% YoY) for the
first time in six years. Inflation remained within RBIs target range with April CPI coming in at 2.9%. Finally, GST Collections
came in at ~100k crores, third consecutive month of over 100k crore collections.

The key themes that continue to excite us remain the same as the economy moves towards the mainstream - Consumption
basket, select Auto Component, enablers of Real Estate & Infrastructure like cement and other building products, Speciality
chemicals, private financials and niche NBFC’s, agriculture and rural consumption.

Your fund, the ABM Core &Satellite Portfolio (ABM C&SP) out-performed for the month with returns of (+)4.9% as against the
benchmark returns of (+)1.3%. The portfolio continues to fare reasonably on longer time frames with 2Y & 3Y returns at
(+)3.6% & (+)14.7% as against (+)10.2% & (+)13.4% for the benchmark (CNX100). We remain almost fully invested with ~4%
average cash levels.

ABM Fund Management Team

Aditya Birla Money Ltd. Registered Office:

10th Floor, R-Tech Park, Nirlon Knowledge Park, Off W.E. Highway, Indian Rayon Compound, Veraval,
Goregaon, Mumbai – 400 063 Gujarat – 362 266
+91 22 6225 7600 CIN: L65993GJ1995PLC064810
care.stocksandsecurities@adityabirlacapital.com | www.stocksandsecurities.adityabirla.com
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 ABM Core & Satellite Portfolio – May 2019 May Review
Portfolio Philosophy & Objective Portfolio Overview

ABM Core & Satellite portfolio follows a dual approach to

Top 10 Holdings
portfolio management, i.e. CORE & SATELLITE. The
Core portfolio aims to benefit from secular earnings Phoenix Mills Ltd
Minda Industries Ltd
5.1%
7.1%
growth story, and satellite portfolio aims to benefit from
irrational (but transient) market behaviour & special Edelweiss Financial
Services
Aarti Industries
5.2%
situations driven opportunities. Limited
7.1% Eicher Motors Ltd
5.4%
Maruti Suzuki India
Ltd Dalmia Bharat Ltd
6.9% 5.4%

Risk & Return Metrics Bajaj Finance Ltd

6.8%
Avenue Supermarts
Ltd
5.7%
Kotak Mahindra
Bank Ltd
6.2%
Performance
1Y 2Y 3Y 4Y ITD
(%)

ABM C&S -13.5% 3.6% 14.7% 11.2% 11.0%

Top 5 Sectors
CNX 100 8.7% 10.2% 13.4% 9.1% 8.8%
Basic Materials
* 2Y, 3Y & ITD Returns Are CAGR Returns 7.12%
Cash
**ITD is Inception Till Date, where Inception Date is 20/04/2015 3.95%
Consumer, Cyclical
27.76%
Risk Metrics (TTM) ABM C&S CNX100
Consumer, Non-
cyclical
Returns 3.56% 10.17% 17.17%

Sharpe's Ratio -1.05 0.12 Industrial

9.15%
Financial
Treynor’s Ratio -0.22 0.02 34.84%

Upside/Downside Capture Ratio 0.19 1.13

***TTM is Trailing Twelve Months
The Above Returns Are Excluding Capital Gain Taxes

Portfolio Characteristics Our Portfolio Winners (Since Inception)

417%
450.0%
L-Cap 54.0%
M-Cap 45.97% 350.0%
236%
Portfolio ROE (2Y Avg) 16.9% 250.0%
167% 150%
Portfolio 2YF EPS CAGR 19.7% 120%
150.0%
Portfolio P/E (2YF) 23.0
Portfolio 2YF PEG Ratio 1.17 50.0%
Dalmia + OCL Minda Aarti Industries Aegis Logistics Kotak Mahindra
Wtd Avg M-Cap 100,938 Industries Ltd Limited Ltd Bank Ltd

Aditya Birla Money Ltd. Registered Office:

10th Floor, R-Tech Park, Nirlon Knowledge Park, Off W.E. Highway, Indian Rayon Compound, Veraval,
Goregaon, Mumbai – 400 063 Gujarat – 362 266
+91 22 6225 7600 CIN: L65993GJ1995PLC064810
care.stocksandsecurities@adityabirlacapital.com | www.stocksandsecurities.adityabirla.com
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ABM Core & Satellite Portfolio – May 2019 May Review

World Market Overview

Global Equity Indices % Chg 1M Global Bond Yields Bps Chg 1M Global Currencies (Vs $) % Chg 1M

DAX -5.00% China 10 Year -10.70 Dollar Index 0.28%

FTSE -3.46% German 10 Year -21.50 Euro -0.41%

Nifty 1.49% India 10 Year -37.90 GBP -3.09%

Nikkei -7.45% Japan 10 Year -5.40 INR -0.19%

S&P 500 -6.58% UK 10 Year -29.90 Yen -2.81%

Shanghai Composite -5.84% US 10 Year -37.72 Yuan -2.53%

Indian Indices % Chg 1M Global Commodities % Chg 1M Macro Indicators Latest

Nifty 1.49% Brent Crude -11.41% CPI 2.92%

Nifty Mid-Cap 2.24% Gold 1.72% IIP -0.10%

Nifty Small-Cap 1.25% Silver -2.40% WPI 3.07%

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information set out herein may be subject to updation, completion, revision, verification and amendment and such information may change materially. Past performance is no guarantee and does not indicate or guide to future

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Aditya Birla Money Limited is acting as a Research Analyst and is registered under SEBI (Research Analyst) Regulations, 2014. SEBI Registration No. INH000002145

Aditya Birla Money Ltd. Registered Office:

10th Floor, R-Tech Park, Nirlon Knowledge Park, Off W.E. Highway, Indian Rayon Compound, Veraval,
Goregaon, Mumbai – 400 063 Gujarat – 362 266
+91 22 6225 7600 CIN: L65993GJ1995PLC064810
care.stocksandsecurities@adityabirlacapital.com | www.stocksandsecurities.adityabirla.com
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