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Investment Strategy - Historical Calls - CY19 & Q1 CY20


Key calls during 2019: Our performance was above average with respect to our history mainly on back of our countercyclical approach towards equity strategy and sectoral calls (on Pharma, Gold and US Equities) going right.


Key strategy calls that added value during 2019

  • During 2019, we have maintained accumulation stance towards equities
  • In Apr-19, we introduced Asset Allocator funds (at Nifty levels 11,669) to rebalance client portfolio gradually and reduce risk.
  • Sep-19 start, we advocated overweight positions into equities (at Nifty levels 10,848) with bias towards Small, Mid and Multicap portfolios (given significant underperformance and relative valuations turning attractive)
  • Towards CY19 end, we changed our stance to Equal Weight as flows were already at their cyclical highs and higher valuations offered relatively lower margin of safety. Also, since the tax cut (announced on 20-Sep’19), Indian equities have run up sharply and have reduced return expectations for CY20.
  • We highlighted in our ‘Outlook 2020’ that it could be a year for moderate return, unless economic environment resumes normalcy.


Key sectoral calls that added value during 2019

  • US Equities: Dec 2018 end, we advocated add to US equities which was incidentally the bottom (S&P 500 Index at 2,351). In Mar-19, we changed our stance to hold and stop any incremental investments in US equities (S&P 500 Index at 2,790). We re-introduced buying into US equities on 24th Mar-20 (S&P 500 Index at 2,447).
  • Pharma: We have maintained our buy call on Pharma since introduction of ICICI Prudential PHD fund since Jun-18 despite in line performance. We reiterated our Hold stance in Feb-20. (Pharma fund - IPru PHD since inception has outperformed Nifty by 43% till 24th Apr-20).
  • Gold: We advocated 10% allocation towards Gold in Jun-19 (at $1,420/ounce) and have reiterated our call in Mar-20 (at $1,654/ounce)


Key call that didn’t add Value

  • Towards May-19 end, we advocated adding to Equity exposure given the strong mandate after general election despite higher valuations, in anticipation of strong offshore flows. (Nifty levels at 11,925).
  • During Feb-20 & Mar-20, we under-estimated severe disruption caused by COVID-19 and its swift spread across the globe. We maintained neutral / equal weight stance towards equities, although an underweight stance could have added more value. However, gradual accumulation and staying low beta by having allocation to asset allocator coupled with allocation to Gold cushioned portfolio performance.


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