Moneylife Advisory Services

About

Moneylife Advisory Services Private Limited is a SEBI-registered portfolio manager (INP000006873) and a SEBI-registered investment advisor (INA000003429).

Moneylife was launched in March 2006 by its founders – Sucheta Dalala and Debashish Basu. 

Key staff

Debashis Basu is the  founder of Moneylife Advisory and a Chartered Accountant by qualification with three decades of experience as a journalist and the author of several business books. He has worked with The Times of India, Business World, Business India, Business Today, Financial Express and has written columns for Business Standard and The Economic Times. How now writes a fortnightly column for Business Standard.

Sucheta Dalal is the founder and the managing editor of Moneylife Advisory and Moneylife magazine respectively. She is a financial journalist with experience of more than 30 years in the finance industry. She is known for her work during the Harshad Mehta scam and CR Bhansali scam and the exposing Enron have appeared in articles in Business Standard, The Economic Times and The Times of India. She received the Chameli Devi Award for outstanding journalism and Femina Woman of Substance Award, both in 1993. LinkedIn profile

Funds managed

Fund nameAsset classLicense 
MAS Prime SchemeMulti cap fundPMS
MAS Growth Scheme Multi cap fundPMS 

MAS Prime Scheme is a multi cap fund, the date of inception of which is 2 December 2019. It is managed by Debashish Basu. The total corpus of the fund as of 28th Feb 2021 was INR 27.88 crores. The strategic benchmark of this fund is Nifty 50 and the return is calculated using the TWRR method. The minimum investment amount required starts from INR 1 crore that equates to US$ 137 thousand. According to PMS AIF World as of 28 February 2021, the number of stocks in their portfolio was 20 and the market cap allocation was 24.82% in large cap stocks, 27.83% in mid cap stocks, 17.52% in small cap stocks and 29.83% in cash.

MAS Growth Scheme 

is a multi cap fund, the date of inception of which is 18 December 2019. It is managed by Debashish Basu. The total corpus of the fund as of 28th Feb 2021 was INR 32.73 crores. The strategic benchmark of this fund is Nifty 50 and the return is calculated using the TWRR method. The minimum investment amount required starts from INR 1 crore that equates to US$ 137 thousand. According to PMS AIF World as of 28 February 2021, the number of stocks in their portfolio was 24 and the market cap allocation was 11.59% in large cap stocks, 37.06% in mid cap stocks, 37.56% in small cap stocks and 13.79% in cash.

Investment philosophy

Moneylife believes that no one can control the market price and corporate earnings, that they cannot know enough about the management and that sometimes even management can be clueless. They believe that more knowledge does not necessarily mean more return and also want to be hassle free from calculation of DCF because they believe that it is impossible to know enough. They respect the significance of price in a manner that it is the only data point that decides investment returns. They try to keep stories away as they are not correlated with returns and believe that scepticism is a virtue. 

They use a classical ‘scientific method’ to invest which is observation, hypothesis, measurement and modification of hypothesis. They say that the heart of their method is data and that data doesn’t lie and that all other things are either subjective or misleading. The company observes what worked in the past, creates hypotheses, measures probabilities and looks to apply it in the future.  They believe that the markets are emergent, complex, social and adaptive and are not bound by strict laws and theorems so they have algos that also are not bound by hard and fast rules. They believe that it is about getting things right more than not. 

What can be said about their investment philosophy is that the company uses data and an algorithmic approach to manage its PMS. MAS Growth seems to be more actively managed than MAS PRIME since PRIME talks about wealth preservation with appreciation however,although this has not been spelled out. They focus on market timing and have an investment horizon of 5+ years. All this is done to maintain low volatility with MAS Growth focusing on long term growth and MAS PRIME on generating reasonable returns. 

Style

MAS Prime Scheme

This PMS believes that the expected key drivers to growth are security selection, timing, allocation to cash and hedging. Them not investing in small caps and micro caps and investing in large caps and mid caps give hint that they have a growth style of investing. 

MAS Growth Scheme

They follow a growth style of investing

Process

They have five steps of management. 

1)Market Filters – The scheme uses filers for the market and stocks. It filters for volatility and liquidity across the three market caps mega, large and mid. They avoid small and micro caps. 

2)Stock Filters – Then they filter and rank the selected stocks as per growth, returns and valuation.  

3)Stock research – In-depth analysis of highest-ranked companies is done for their competitive position, corporate governance, growth drivers, valuation and price strength. List is then reviewed quarterly.

4)Portfolio Construction – Exposure limits and asset allocation is based on a combination of valuation and price strength. 

5)Monitor and Exits – Exits are done on changes in fundamentals, valuations and price indicators. 

Tactical allocation is huge too which is why they have exit strategies of stocks.They also hedge the stock portfolio against sharp declines and cash positions against sharp rallies.  

Media

How we play the loser’s game, Debashis Basu, Jan 2020

https://advisor.moneylife.in/media/pdf/pms/Jan_20.pdf

The founder talks about how they play the loser’s game. He explains in this letter that the first step before the selection of stocks is elimination. He talks about wanting to remove the noise that is existent in all the stocks that are available. They use filters to come up to the stocks that will create value as they believe that not all stocks do that.

Analyst questions

1)The letter by the CIO talks about the company being hassle free from DCF valuations to predict the future returns and the investment process talks about filtering using returns and valuations. If not DFC then what variables do you value a stock with? 

2)The two PMSs Prime and Growth schemes look to be pretty much the same. What is the difference between the two in terms of constituents of the portfolio and style? 

3)What approach do you use to invest in a stock? Bottom up or top down?

4) There were hints of a top down approach but not much talk of industry and economic analysis has been made. How do you analyse the economic and industry performance?

5) Why does your multicap fund not invest in small and micro cap securities? 

6)What in the view of the PMS is a high quality stock?

7) How does the company define low volatility? How much deviation hit is the company ready to take before it exits a position. 

8) The data available online shows that the fund had invested about 30% in small caps while the company downloads of the PMS schemes say that you avoid the same? What made you add them to the portfolio and why do you avoid them otherwise?

9) I ask this because the PMSs are multi cap and the definitions online state them to be just large cap stocks. What is your definition of a blue chip stock?

10) What are some of the details that you look at that are avoided while filtering stocks?

11) What is the filtering process made up of?  

Prepared by – Madhav Patel 

Date – 01/04/2021

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