IIFL Multi Cap PMS started in the year 2014. IIFL PMS or Infoline PMS is one of India’s largest portfolio management services. The AMC ARM provides excellent investment strategies and plans to its clients, ensuring their complete satisfaction. IIFL is one of the country’s largest and most popular portfolio management service portals. A portfolio management service model is a very popular and well-known model of the IIFL stockbroking platform. They are primarily well-known for their PMS performance.
Mitul Patel is holding the post of Senior Vice President. Mr Mitul has 14 years of accounting experience in research, fund management, private equity advisory, and investment banking. He is in charge of multiple roles in the company because he has a clear vision.
Their investment philosophy is based on a hybrid, data-driven and high-conviction strategy. Their research and investments employ a top-down approach to identify select sectors with the best prospects while simultaneously picking stocks within these sectors based on a bottom-up, fundamentals-based approach. They use a similar strategy for debt investments, where they constantly look for opportunities to leverage the difference between the market value and intrinsic value of debt securities to generate optimal returns.The portfolios are concentrated, risk-adjusted, and thoroughly researched.
In this interview, we can see Mr. Mayur Patel talking about their portfolio construction. So they basically have their investment framework divided into 4 quadrants – secular, cyclical, defensive and value traps.
The companies whose ROE and profit growth in the last 10 years is consistently more than 15% fall in the secular category. High quality companies with great potential fall into this. So they are overweight in this segment. (Around 35%)
And after this segment, a large portion of their portfolio is shared between cyclical and defensive segments. In cyclical, there is a strong growth for 3-5 years, but in 10 years time, ROE is sub par, it is less than 15%.( Like cement, construction, capital goods, industrial, infrastructure, private sector, corporate lending). In the defensive segment, they have high ROE, but the growth is very modest.( Industries like FMCG, pharma, IT, and media).
Value traps are those companies that struggle to generate good ROE and turn out to be value traps. They generally avoid value traps but have little exposure and do invest in them only if they see things change structurally which can drive significant improvement in ROE of those companies because of either regulatory changes or change in competitive landscape or any company specific changes like change in management, promoter holdings etc.
This framework helps them to have a diversified exposure to the market. He also says that their strength is bottom up approach i.e., to generate unique alpha ideas, fit into this framework and comply with risk management and generate alpha which is more sustainable.
And there are 2 types of PMS offerings. One is Multicap and the other is phoenix. So in multi cap pms, most of the weight or around 70% of the weight goes to secular and defensive, so slightly lesser risk. And if we talk about phoenix pms, most of the weight goes to cyclical and value traps as they look for turnaround strategies and generate better returns.