About
A.K. Wealth Management was incorporated in November 2006. It is a SEBi registered portfolio management company(INP000003674). This company is owned wholly by the A.K. Capital Services Limited. The company provides PMS to investors and specialize in the debt market space.
Key staff
Aditi Mittal – Aditi is also a Director at AK Group, a financial services group started by her father. She joined the business in her late teens itself and has been instrumental in leading the growth strategy of the firm for the past decade. AK Group is now a leading bond underwriter in India and activities include investments for their own NBFC, national retail distribution of bonds, broking, investment banking, capital markets origination, and international financing. LinkedIn Profile
Funds managed
| Fund name | Asset class | License |
| Credit Alpha Debt PMS | High yield credit fund | PMS |
| Credit Ease Debt PMS | High yield credit fund | PMS |
Investment philosophy
Both the funds are based on the core philosophy but there are also some differences.
Philosophy
The company follows a hold to maturity approach with the style being dependent on market conditions and also actively explores arbitrage opportunities. This is done to ultimately achieve 10-13% returns depending on the strategy that they use. Ideal investment horizon is 2-3 years and the objective to provide stable regular interest income.
Style
AK Wealth Management Private Limited uses the style of value and quality(growth) style of investing depending on the market conditions.
Process
The company invests to diversify the portfolio across credit ratings, fixed income instruments and sectors. This statement is indicative of a bottom up approach but more clarity to confirm the same. As for debt instrument selection, the company works in appreciating market conditions to invest in high yielding inexpensive value bonds for gaining income and capital appreciation and it works in a stressed market to buy low yielding high quality bonds to seek income and capital preservation. In periods of market volatility, the firm tries to seek capital gains and above regular income through buying of bonds where an arbitrage opportunity exists. This is indicative of the active philosophy that the fund follows. The company also has a diversified portfolio which is full of debt securities available at their disposal just in case the PMS needs it.
Difference in Process
Credit Alpha
They have a model portfolio that targets a specific yield and tenor as per the fund manager requirements and all the investors money will be invested in the model portfolio. They target securities with maturity of 2-4 years. They also don’t mind longer tenor if there is an opportunity where there is liquidity expected before maturity.
Credit Ease
There are customised requirements that are catered to by the fund manager. The factors that are looked at while customization are target yield, investment horizon, risk appetite and regular income. Then they diversify the portfolio using 8-10 securities which depends on the size of the portfolio and the face value at which the security can be bought. The needs of the investors are studied to decide whether the tenor will be long or short.
Media
None found
Analyst questions
- The fund looks at ratings of the debt instrument and only invests from AAA to BBB rated bonds. How much do you believe in the efficiency of these rating agencies and their ratings?
- Does and how does the manager of the funds go above and beyond to do checks on the security issuer?
- What is the action that the fund takes as soon as there is a change in the credit rating of the fund in both the directions?
- The Nifty composite debt index is a hybrid index with debt and equity. Why do you not use a debt only index?
- Could you give a successful and a failed example of an arbitrage that the fund went through?
- Have you come across equity returns as safe as debt?
- Is that true that the company follows a bottom up approach of security selection? Can you go through the process by which you select a security?
Prepared by – Madhav Patel
Date – 24 March 2021
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