The US Dollar got beat up on Fed’s re-assurance to the markets that it is in no hurry to raise rates. Precious metals rallied and oil caught a break. Most equity markets ended in the green except for India.
Index Returns
Market Cap Decile Performance
Decile
Mkt. Cap.
Adv/Decl
1 (micro)
-5.00%
56/77
2
-4.91%
59/74
3
-4.09%
56/77
4
-2.81%
58/74
5
-4.43%
62/71
6
-3.76%
60/73
7
-3.01%
59/73
8
-1.63%
60/73
9
-0.96%
70/63
10 (mega)
-1.39%
67/66
Mid- and small-cap stocks took it on the chin this week on the sudden realization that the (earnings) emperor has no clothes.
“Lucky” people are adept at creating and noticing chance opportunities (such as meeting an important businessman at a café), listen to their intuition, have positive expectations that create self-fulfilling prophesies, and have a relaxed and resilient attitude about life’s trials. Poor unlucky souls are more tense and anxious than lucky ones.
MNC funds invest in the Indian listed shares of foreign firms, like Bosch, Britannia and Colgate Palmolive. The funds are bench-marked against the CNX MNC Index.
The MNC index has out-performed pretty much every other market-cap index. We had discussed this previously and had pointed out that the UTI MNC Fund is decent place to get exposure to this asset class.
UTI vs Birla Sun Life
Thankfully, there are only two funds that track this asset class – one is the UTI MNC Fund and the other is the Birla Sun Life MNC Fund. Here’s how their growth schemes compare:
Between 2006-07-03 and 2015-03-19, BSL MNC Fundhas returned a cumulative 478.61% with an IRR of 22.31% vs. UTI MNC Fund’s cumulative return of 427.17% and an IRR of 21.02%. (http://svz.bz/1Exk126)
The difference in performance between the two funds is de minimis when you consider that the period of comparison is almost eight years. The main thing to focus on here is that an IRR of ~22% is extremely hard to achieve in any asset class over that stretch of time.
Active Management
SYMBOL
Birla Sunlife MNC Fund
UTI MNC Fund
CNX MNC
INGVYSYABK
8.97
3.01
–
ICRA
8.67
–
–
HONAUT
8.53
3.48
–
BAYERCROP
8.33
–
–
BOSCHLTD
5.99
7.19
9.22
GILLETTE
5.89
2.71
–
GLAXO
5.48
1.44
2.59
PFIZER
5.15
1.38
–
MARUTI
3.62
7.16
18.09
STERLINH
3.61
–
–
CRISIL
3.01
2.92
–
HINDUNILVR
2.74
4.21
24.37
CUMMINSIND
2.73
4.36
4.38
WABCOINDIA
2.47
0.32
–
ACC
1.96
–
–
BATAINDIA
1.65
–
–
HITACHIHOM
1.64
–
–
FAGBEARING
1.47
–
–
KANSAINER
1.45
–
–
COLPAL
1.39
1.33
5.02
PGHH
1.35
1.92
–
OFSS
1.15
2.43
2.62
SMLISUZU
1.15
0.12
–
AMBUJACEM
1.11
3.64
7.25
NESTLEIND
0.94
1.38
–
ALSTOMT&D
0.72
1.76
–
BLUEDART
0.71
0.58
–
SIEMENS
0.7
3.04
4.66
FMGOETZE
0.69
–
–
ITC
0.66
–
–
AIL
0.59
0.17
–
DISAQ
0.57
–
–
AKZOINDIA
0.53
1.6
–
FULFORD
0.52
–
–
ABB
0.49
–
2.51
SANOFI
0.46
1.41
–
ITDCEM
0.46
2.31
–
CASTROLIND
0.45
2.97
2.59
RANBAXY
0.36
0.58
–
SCHNEIDER
0.26
–
–
MPHASIS
0.07
2.33
1.2
EICHERMOT
–
6.28
–
BRITANNIA
–
4.17
4.84
MCDOWELL-N
–
2.53
–
SKFINDIA
–
2.47
–
MAHINDCIE
–
2.13
–
SSLT
–
1.95
7.96
INGERRAND
–
1.49
–
MONSANTO
–
1.13
–
TIMKEN
–
1.07
–
CLNINDIA
–
0.97
–
GSKCONS
–
0.9
2.69
AUTOAXLES
–
0.38
–
WHIRLPOOL
–
0.21
–
Both funds are actively managed. There is no “index-hugging” going on here. However, between the two, the Birla Sunlife fund significantly differs from the CNX MNC index.
Portfolio trajectories
Both have allowed their winners to run and have different positions that have worked out well for them. Here’s how the Birla Sunlife Fund looks like:
And this is how the UTI Fund looks like:
The View
You will do well to have either fund in your portfolio. But given the narrow focus of these funds, these should complement your portfolio rather than dominate it. If you have any questions, feel free to get in touch!
The markets threw a taper tantrum with rising rates in the US almost a certainty this year.
QE pushed the Euro down to ~parity vs. the US Dollar.
It was a bad week for the commodity complex as well as the rise in USD pummeled pretty much everything.
Nifty Heatmap
Index Returns
Sector Performance
Advance Decline
Market Cap Decile Performance
Decile
Mkt. Cap.
Adv/Decl
1 (micro)
-4.85%
66/68
2
-2.91%
61/72
3
-1.30%
64/69
4
-0.80%
67/67
5
+0.51%
64/69
6
-0.18%
62/71
7
+1.14%
68/66
8
+0.52%
69/64
9
+0.37%
66/67
10 (mega)
-1.01%
62/72
A bit of green in the belly of the beast but red in the large- and small-cap zones.
The long-end of the curve wilted – given the rate of revisions in GDP estimates, our policy makers are more or less flying blind. Not a comforting thought if you are a bond investor.
Human leadership is almost entirely leadering. It is:
90% flying starling bullshit that just looks meaningful,
9% poorly calibrated goose-like navigational inertia reflecting ancient realities that have almost certainly shifted, and
1% lion-like roaring and posturing by a charismatic few.
Leaders like to call the three elements agility, mission and vision.
We run our proprietary momentum scoring algorithm on indices just like we do on stocks. You can use the momentum scores of sub-indices to get a sense for which sectors have the wind on their backs and those that are facing headwinds.
Traders can pick their longs in sectors with high short-term momentum and their shorts in sectors with low momentum. Investors can use the longer lookback scores to position themselves using our re-factored index Themes.
Here are the best and the worst sub-indices:
Refactored Index Performance
50-day performance, from December 23, 2014 through March 04, 2015:
The Nifty barely managed to keep its head above water this week.
The ECB finally announced the details of its QE program and it looks like it fell short of what the market expected.
Aristotle talked about three kinds of work: theoretical, practical, and poetical.
The first searches for truth.
The second is practical with an objective around action.
The third, however, is lost in our modern culture.
