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Our March '21 Performance

India PMS Performance: March '21

The Pure Equity India Super 50 (IS50) is up 2.0%*

While NSE 500 is up 1.2%

The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) is up 1.2%*

And CRISIL Moderate Hybrid Index (our benchmark for IMAAP) is up 1.7%

*All performance numbers are post fees

 

India PMS Performance: Calendar 2021 YTD 

The Pure Equity India Super 50 (IS50) is up 12.3%*

While NSE 500 is up 7.2%

The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) is up 5.7%*

And CRISIL Moderate Hybrid Index (our benchmark for IMAAP) is up 3.3%

*All performance numbers are post fees

 

India PMS Performance: From March'20 till date

The Pure Equity India Super 50 (IS50) is up 58.9%*

Vs

NIFTY 50 that is up 33.0%

NIFTY 500 that is up 34.1%

The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) is up 27.3%*

Vs

CRISIL Moderate Hybrid Index that is up 23.3%

Since Inception, the volatility for IS50 was 18.6% as against 30% for the NSE 500 and nearly 46% for the Nifty. The volatility for the IMAAP was a mere 10.6% against 15% for the CRISIL Moderate Hybrid Index

*All performance numbers are post fees

 

Global Fund & PMS Performance: March '21

The First Global Global Freedom Fund - Global Tactical Strategies

(FG GFF-GTS) (US Dollar terms) is down 3.0%* (with TIPP hedges in place)

Our Global Portfolio product, the GMAAP (US Dollar terms) is down 0.9%*

Vs

MSCI ACWI Index that is up 2.7%

Bloomberg 80:20 Index that is up 2.3%

*All performance numbers are post fees

 

Global Fund & PMS Performance: Calendar 2021 YTD

The First Global Global Freedom Fund - Global Tactical Strategies

(FG GFF-GTS) (US Dollar terms) is up 0.2%* (with TIPP hedges in place)

Our Global Portfolio product, the GMAAP (US Dollar terms) is up 3.2%*

Vs

MSCI ACWI Index that is up 4.4%

Bloomberg 80:20 Index that is up 3.2%

*All performance numbers are post fees

 

Global Fund & PMS Performance: Calendar 2020

FG GFF-GTS (US Dollar terms) was up 31.4%*

GMAAP (US Dollar terms) was up 30.8%* 

Vs

MSCI ACWI Index that was up 14.3%

Bloomberg 80:20 Index that was up 15.3%

Our performance came with relatively low volatility

Annualised volatility was around 22% for our products in the turbulent year, 2020, versus 30% for the MSCI ACWI Index and 37% for the S&P 500!

All performance numbers are post fees

 

The ice cracked. But not where it was the thinnest

We went into March, apprehensive. Though, of course, that's been a tired line since September last year.

The careful stance had saved us in January and February this year, where we ended up for January, despite a down month for markets, and February was good too.

After a stupendous 2020 (up 31% vs 14-15% for the benchmarks), our Global portfolio product GMAAP performed in line with the Bloomberg 80:20 benchmark (up 3.2%) for the first quarter of 2021.

The headline number for the GFF-GTS was somewhat lower. And there are reasons for that.

In both India and the GFF-GTS, we went in with TIPP (Tactical Insurance for Portfolio Protection) hedges on, so that a sharp sell-off wouldn't hurt us much. Almost the entire hedge was on the NASDAQ (those are the most liquid anyway) while in India, we had them on the NIFTY 50 and the Bank NIFTY.

The Indian hedges worked out quite nicely. More on that later.

The NASDAQ hedges flattered to deceive. And ended up costing us ~1% on the GFF-GTS, in March. So while the general expectation was that rising bond yields would hit US technology stocks, and while they did have a bit of a rough ride in March, the real damage was in the Pacific Rim technology sector!

But that's okay. When we put on TIPP Tech, we remain clear why we are doing it: to hedge against catastrophic losses.

TIPP cannot protect against routine, garden variety falls because a whipsawing market, like what we saw globally in March '21, is no place for Puts to work.

In the end, India did phenomenally well, while globally, things were slightly tricky.

As we explain in greater detail now.

India Performance Analysis

India had a generally good outing.

We were ahead of the benchmark NIFTY 500, by about 1 percent point.

And calendar year to date, it's been more than satisfying.

We are up 12% Vs NIFTY 500 which is up 7.1% CYTD.

Since March '20 last year, our Pure Equity India Super 50 (IS50) is up 58.9% vs 33.0% for the Nifty and 34.1% for the NSE 500.

As can be seen from the graph given a little later, it is far and away the best performing multicap PMS scheme in India since inception.

Even better, these returns have come at a far lower volatility than was the case for the market and the competition (will be discussed in more detail in a forthcoming note).

Since March 2020, the Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) is up 27.3%.

Vs the CRISIL Moderate Hybrid Index that is up 23.3%.  

Our big winners in March were: Jindal Poly Films Ltd. up +50%, Mindtree up +30%, Deepak Nitrite up +21%, Justdial up +21%, and JSW Steel up +18%.

But the vital point is that our results come on a widely but intelligently diversified portfolio, reducing risk remarkably.

In a small cap bull market, many momentum players can look good. For a while. And then those funds flame out. We all have seen this movie play many times before.

The key is to always ask: Are the Performance numbers, the result of skill, or higher risk?

We always look to balance returns with great risk management.

Of course, our winners will have cyclical pullbacks, as we saw in the Global Fund last month.

These counter trend moves are an inevitable part of Investing: your winners will lose, for a brief while, while the losers will win.

We just ride these periods out, with minimal damage.

That's all.

Take a look at the Comparative Performance (till February 2021, which we will update once we have March for everybody else)

Description: Description: Description: cid:image002.jpg@01D6A628.937DB4C0

Global Performance Analysis

Forgettable months should never actually be forgotten.

They must be analysed. And remembered.

Let's look granularly at what "hurt" us in March, particularly in the GFF-GTS.

Pretty straightforward. And the good thing is that our hurt came from very clearly identifiable issues in markets: choppiness, China, Japan, US Tech, and overall, Emerging Markets. (Just so that everybody knows this, Emerging Markets had a tremendous run from the last quarter of 2020 till February 2021).

And we benefited substantially from this. As experienced investors understand very well, strongly outperforming markets and stocks will have cyclical pullbacks and Emerging Markets had theirs in March, falling ~2%.

Here's the analysis of what hurt us in March on the GFF-GTS:

  • TIPP Hedges cost us around 1% in March (not in the GMAAP where we cannot use hedges in most portfolios)
  • FX translation cost us around 0.3% as Emerging market & other Asian currencies, that had been strengthening against the US Dollar till a couple of months back, weakened
  • Our Emerging Markets exposure cost us around 1%. Here's how:
  • China (despite being a very low weight already, just around 7% of the Portfolio), cost us 0.4%, thanks to the Archegos hedge fund liquidation fire sale

Our biggest winners of the past few months: Baidu, Meituan, JD.com, pulled back, quite substantially, as they were bound to at some point, given their solid gains of the previous several months.

Just to refresh memories, JD.com, Inc is up +132%, Baidu is up +181%, Meituan is up +263%, Netease is up +127% and Pinduoduo is up +375% since April 2020. A bit of give back of these gains was due. That happened.

  • Taiwan Semiconductor pulled back, even as semis overall did solidly in March. As our investors know, this has been an absolute slam dunk for us since the middle of last year, almost doubling in value since the time we bought it.

Generally speaking, an Emerging and Asian market pullback led to do a pullback in some of its strongest names.

  • Japan was a 9% Weight in our Global Fund and GMAAP, and it had a reasonable down month, costing us ~ 0.3%. This was accounted for by just one stock: Fast Retailing! Again, Fast Retailing has been one of our biggest winners over the last several months, rising 137%, and a pullback was in order.
  • In the US, our extremely small Tech Weight of just about 8%, cost us around 1%. From names such as Upwork, Etsy, Twilio, Roku, PayPal, Square, Snap, Pinterest. All huge winners for us last several months. A pullback again was in order and it happened in March.

 

Our Winners in March

Of course, we had some great winners too in March. Here goes:

Evolution Gaming is up +22%, Kuehne + Nagel International AG is up +18%, Scotts Miracle-Gro is up +15%, Williams-Sonoma, Inc is up +14%, AMAT is up +13%, ASML is up +9%, Palladium up +13%, Steel up +8.4%. etc.

Here is something really bizarre: Just a few weeks before the Suez Canal grey swan, we had bought quite a few marine and shipping logistics stocks, like Star Bulk Carriers, SITC International Holdings Co Ltd in Hong Kong and Kuehne + Nagel International AG in Switzerland.

As is to be expected, these stocks did phenomenally well because of the grey swan.

Why had we bought these?

Because GLOCOM, which is a subsystem in our overall tech stack, ExoTech, had signalled a buy in marine and shipping logistics stocks, several weeks before the Suez Canal incident happened!

This artificial intelligence thing can be quite something because it can connect dots globally (through our SkyEye system) that we human beings simply cannot do.

 

Key takeaways for our investors

The really sharp eyes of experienced investors, upon reading the above paragraphs, will see one thing clearly: we do not run the risk of catastrophic losses.

From running portfolio insurance at key points of danger in the markets (everybody will agree that sharply rising bond yields are a real danger for markets), to cutting back on highly volatile sectors as we have done in the last several months after having made a ton of money from March until August last year, to very careful position sizing (despite the carnage in China, the hit to our portfolio was a small 0.3%) and finally a tactical diversification across asset classes as you can see in our positions in global steel, copper, oil, palladium.

As you can see, our strategy of keeping a number of strongly performing, and yet uncorrelated positions, across markets, geographies and industries, shows that even in a "bad" month, we do not suffer anything substantive.

What this also means for our investors is that we will have the occasional counter trend month as March which in some senses, we routinely expect after 2-3 months of strong performances, because that is what statistically, is due.

However, these counter trend months will never result in any significant damage. Even good stocks and good portfolios, well-constructed, with low intra-portfolio correlation, will exhibit periodical pullbacks.

That is all very, very central to investing.

How are we positioned now?

Quite well actually.

Take a look at our pie chart ending March 31st 2021.

Description: Description: Description: cid:image002.jpg@01D6A628.937DB4C0

This is a very well chosen spread, across the world and across asset classes as you can see.

To reiterate, the way we do things around here are:

Our Investing Mantras

 

  • Avoid the Big Losses
  • Be the "House", not the "Gambler"
  • Protect in Down Markets
    Participate in Up Markets
  • Play for Singles. Not for Home Runs
  • Play Everything. Believe Nothing
  • Not Bullish. Not Bearish. Be Hare-ish
  • Great trades are like buses.
    There's always one coming
  • No Storification. Just Datafication
  • Rigidity Kills. In Arteries. And in Investing

 

And our Human+Machine delivers these Returns with the lowest possible risk.

As we've said before.

We do not run "High Conviction" risk.

We do not run "Storification" risk.

We do not run "High Concentration" risk.

And yet we deliver.

Or maybe, that's why we deliver.

That is the beauty of our proprietary Human+Machine investment model.

For those who aren't invested with us, but want in, just drop us a line on https://bit.ly/3fQsWJl and we will drop you an email, as soon hedge funds blow up these days. That's about 2 day’s tops!

By the way, you can also WhatsApp us on +91 88501 69753

Chat soon!

From Your Friends at First Global

Trusted Financial Advisors to some of the world's largest Funds, Institutions & Family Offices, for 30 years

https://firstglobalsec.com

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If there is one gift you should give yourself on this Women’s Day, it is to take charge of your finances and investments.

This is true Self-care!

Too many women remain ambivalent about handling this and leave it to the male members of their household, but it is extremely key to your well-being. This is true self care - taking care of your future self.

Even if you are a home maker and do not have direct income of your own, you can still volunteer to do this as part of your share of family duties. 

If you are a working woman and think that you do not have the time for this, please delegate some of your household duties but do take charge of your Investments.

Confidence does not equal Competence 

One reason why women often hesitate to take over or manage their investments and finances is that that they feel underconfident and not equipped to deal with these matters. 

There are two parts to this: One, now it is easier than ever to educate yourself and in a form that makes learning easy for you - whether it is reading from books or the internet or watching videos. There is plenty out there to help you learn the basics. 

Secondly, remember that women tend to underestimate themselves. Just because a man in your life acts more confident does not mean that he knows more about financial matters. Several studies show that women actually perform better at investing than men even though men think they are better at it! 


It is a Fee, not a Failure 

When you do start investing, please be aware that there will be losses at some stage of your investing journey. The important thing is not to look at these losses as a personal failure but as the fees of being in this game - just as you don’t think of the price of a ticket to a concert as a loss.

It is as the software guys say: The losses are a feature not a bug. Thus don’t lose heart in your capabilities if and when you do face losses. 

Risk Management is key but not total Risk Avoidance

Having said that, you must take adequate precautions so that none of these losses are crippling or more than you can afford. 

Risk management is always key in investing. Learning about this and putting it in place is extremely important in your investing journey. 

However, risk management does not mean that you go only for investments that are 100% risk free for 100% of your corpus because this strategy will also limit your returns. 

While higher risk doesn’t always equal higher returns, if you are young will likely have to go beyond the 100% safe investment to optimise returns. 


The Really good news! 

All investing studies show that most of your returns come from asset allocation in your Investment pie chart and not from security selection. 

In simple language, what this means is that it is more important to know how your entire portfolio is allocated across fixed income, equity, commodities, real estate, gold etc. and across geographies including those beyond India; than it is to know every hot stock that someone maybe boasting about in a party. 

This also means that the time that you need to spend on your investment gets reduced dramatically.

You don’t have to search for that elusive multibagger. Instead, you have to follow strategies which gives you the Optimum returns over time with proper allocations. 

For instance, if you have your investments only in Indian equities you are exposing yourself to SCCARs that is Single Country Single Currency Single Asset Risk. 

You will need to diversify beyond that into others assets like fixed income and gold as well as ideally, beyond India with an asset manager who can provide you a dynamic and tactical asset allocation.

The choice of your asset or Investment manager maybe the most crucial investment decision you make - more so with the limited time that most women have with multiple demands on their time. 

Happy Women’s Day and Happy Investing! 

(A version of this article first appeared in The Economic Times)

From the desk of 

Devina Mehra & Shankar Sharma

If you want any help at all in your wealth creation journey, in managing your Investments, just drop us a line via this link and we will be right by your side, super quick!

Or WhatsApp us on +91 88501 69753

Chat soon!

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One of the key metrics we, at First Global, look for, when building our Portfolios, is: how correlated are our Positions. Meaning: do we have many stocks in the overall same category, eg, US NASDAQ, which then means that even if we have 25 such stocks, in effect, because of the very high correlation between them (95-99%), we actually own just one stock! And that's hugely risky, even though on paper, we own a diversified basket of 25 stocks.

Therefore, central to building a durable investment strategy is to constantly build several streams of uncorrelated- low correlated assets, that still directionally beat the market, and yet have very low chance of falling together. Think, JSW Steel and IndiaMART, together. Get the drift? 

And this is possible because of a wide dispersion in asset class returns, even at the very same time.

Let's dive deeper. 

Cross-asset investing is a strategy that is basically built on the premise that the correlation between various asset classes such as Equities, Fixed Income, Commodities and Currencies remains low enough most of the time to allow for investors to benefit from diversification. Some ultra- sophisticated investment strategies, driven by vast computing power, tend to be built around this assumption and thus, end up applying the famous Markowitz Model in their cross-asset portfolios.

In finance, the Markowitz model - put forward by Harry Markowitz in 1952 - is a portfolio optimization model that assists in the selection of the most efficient portfolio by analyzing various possible portfolios of the given securities/assets. Here, by choosing securities that do not 'move' exactly together (think low correlation), the HM model shows investors how to reduce their risk (defined by volatility here).

But, does this actually hold true when we look at the data? 

Below we shall look at the performance of Equities (major markets), Fixed Income & Commodities across the following years: 1997, 1998, 2000, 2001, 2002, 2003 & 2008. The return dispersion is quite eye-opening.

The year 1997 was something Investors across the world couldn't have imagined. Asian " tiger nations"  were red hot.  The crisis started in Thailand on 2 July, with the financial collapse of the Thai baht after the Thai government was forced to float the baht due to lack of foreign currency to support its currency peg to the U.S. dollar. The contagion spread across the region and we saw equity markets in Thailand, Indonesia, Malaysia, South Korea & Philippines crash 60 to 75% in USD terms! 

One would assume that such an extreme event would lead to broader sell-offs globally, right?  The amazing thing was that dispersion was large not only across asset classes but also across global equity markets. 

Non-Asian emerging markets and European markets were on a tear that year. We saw Turkey, Greece, Mexico surge 85%, 58% and 53% respectively. Even developed markets such as the US (S&P 500) and Germany advanced by 47% and 33% respectively!

Cross-asset class divergence was also at display as US treasuries (10-year) outperformed commodities by managing to edge 3% higher while Crude and Gold dropped 30% and 21% respectively. 

Blind diversification, of course,  does not help. That only kills returns, while reducing risk. Tactical positioning by understanding the drivers of cross-asset moves, vulnerability to correlation spikes and being cognizant of tail risks are key to achieving true global and cross-asset diversification.

In the following year, we saw a very similar picture in the non-equities space as yet again US treasuries (US 10Y: +6.2%) outperformed broader commodities (CRB Index: -13.5%). However, the story is equities reversed with Latin American emerging markets falling more than 35% while Russia was the worst. During the Russian Crisis of 1998, annual yields on ruble-denominated bonds rose to more than 200% and stocks lost more than 75% of their value. 

So yes, just buying the winners/outperformers of the previous year would have almost certainly bankrupted you!  Return Dispersion continued in equities as we saw South Korean markets bounce back ferociously with an 85% surge while NASDAQ saw similar gains in 1998 in the lead up to the Tech Bubble in 2000.

Let’s now jump ahead to the Tech Bubble of 2000. This was the year of the correlation spike! Anything and everything sold-off except US Treasuries which benefited from the flight to safety like a classic textbook move. We saw EMs crack 30-40%, NASDAQ plunged 36% and even Gold couldn’t have saved you as it too delivered a negative return of more than 5% that year.

 Interestingly enough, China was the only one that remained insulated and insulated how! The Chinese market skyrocketed 52% that year! Even today, China continues to remain a relatively low correlation exposure to have, especially in its fixed income.

By 2002 & 2003, the picture began to morph: Crude came back with a vengeance, delivering a stellar 44% return in 2002 and was up more than 5% in 2003. 2002 was a great year for commodities, as apart from Oil, we also saw Gold outperform most asset classes with a 24% return while the CRB commodities index itself surged by 15%. 2003 was a year similar to 2000, only that negative sign was flipped to a positive one. You could throw a dart at any asset class or equity market and manage to get a decent positive return. EMs (Thailand, Brazil, Turkey, India, and Russia) rallied 70 to 100%,

 But again, returns weren't uniform: Developed market Equities delivered just 30% vs a near 3x return from Emerging Markets! 

From 2010, began the unravelling of the "Long Emerging Markets/ Short US Equities" trade. The next 10 years belonged solidly to the US markets, with most Emerging Markets delivering zero returns over a decade, in US Dollar terms. So, again, we see massive Dispersion of returns, even within the Equity class itself.

"FAANGS" and NASDAQ became the go to trade for Investors across the world.

And then came 2020.

A look at the Top Performing markets in 2020 is instructive. Vietnam was No.1, with 80% returns. Korea was No. 2 with nearly 50% (India was No. 21 with 12%). 

And from the last quarter of 2020, the data becomes even more dramatic: The crowded NASDQ (NDX) long trade delivered only 16% while the broader US markets (SPX) returned 16% too, therefore, it was clear that the NASDAQ was beginning to lose steam rapidly.

However, Emerging Markets gave almost 2X the return (EEM: +28%). Some of the star performers included: Turkey: +49%, South Korea: +41%, South Africa: +41%, Taiwan: +36%, India: +33%, Indonesia: +35% and Greece: +30%. Even Japan delivered a stunning 31%.

What the entire Analysis as above shows, investing is never a static game. It's a game of several possible coexisting outcomes, of which only one/ few will come true...and usually, that will be the one that's least expected.

One common investing bias is "Recency Bias": that is, the mind tends to expand a recent Trend, into as if that trend has always been there. 

The FAANG bull market from 2016 to 2019, convinced everybody that NASDAQ and FAANGS were the only moneymaking game in town. 

2020, specially the second half, showed a completely different picture, as most of the FAANGs went into hibernation, NASDAQ Index flattened out, Emerging Markets took off, forgotten markets like Greece, Turkey, Korea, Taiwan,  Scandinavian markets, blew out the lights. 

From September 1, 2020 the NASDAQ delivered only 8% while Taiwan delivered 36%, South Korea surged 42%, Turkey, the best performer rose 50%, Greece delivered 25%, Sweden advanced 21% and Denmark did 13%.

In fact, even in 2019, the NASDAQ wasn't the best performing market. The top markets were Russia and Greece!

A longer term Analyses of global market and asset class returns show only one recurrent theme: that leadership keeps changing, almost every single year. There is very little persistence of returns in a majority of cases, and to add to the complications, there is very wide dispersion in returns as well!

Global investing is a complicated game, and an oversimplified, underanalysed approach can lead to very poor return payoffs.

(A version of this article was first published in Mint)

From the desk of 

Shankar Sharma & Devina Mehra

If you want any help at all in your wealth creation journey, in managing your Investments, just drop us a line via this link and we will be right by your side, super quick!

Or WhatsApp us on +91 99206 71949

Chat soon!

https://firstglobalsec.com

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Our February '21 Performance

Global Funds' Performance: February '21

The First Global Global Freedom Fund - Global Tactical Strategies

(FG GFF-GTS) (US Dollar terms) is up 1.9%* (with TIPP hedges in place)

Our Global Portfolio product, the GMAAP (US Dollar terms) is up 3.2%*

Vs 

MSCI ACWI Index that is up 2.1%

Bloomberg 80:20 Index that is up 1.8%

*All performance numbers are post fees

 

Global Funds' Performance: Calendar 2021 YTD 

The First Global Global Freedom Fund - Global Tactical Strategies

(FG GFF-GTS) (US Dollar terms) is up 3.3%* (with TIPP hedges in place)

Our Global Portfolio product, the GMAAP (US Dollar terms) is up 4.1%*

Vs

MSCI ACWI Index that is up 1.9%

Bloomberg 80:20 Index that is up 0.8%

*All performance numbers are post fees

 

Global Funds' Performance: Calendar 2020

FG GFF-GTS (US Dollar terms) was up 31.9%*

GMAAP (US Dollar terms) was up 31.4%*

Vs

MSCI ACWI Index that was up 14.3%

Bloomberg 80:20 Index that was up 15.2%

Our performance came with relatively low volatility

Annualised volatility was around 22% for our products in the turbulent year, 2020, versus 30% for the MSCI ACWI Index and 37% for the S&P 500! 

*All performance numbers are post fees

 

India PMS Performance: February '21

The Pure Equity India Super 50 (IS50) is up 10.2%*

While NSE 500 is up 7.9%

The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) is up 5.4%*

And CRISIL Moderate Hybrid Index (our benchmark for IMAAP) is up 2.6%

*All performance numbers are post fees

 

India PMS Performance: Calendar 2021 YTD

The Pure Equity India Super 50 (IS50) is up 9.9%*

While NSE 500 is up 5.9%

The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) is up 4.5%*

And CRISIL Moderate Hybrid Index (our benchmark for IMAAP) is up 1.5%

*All performance numbers are post fees

 

India PMS Performance: Since Inception (Feb’20) till date

The Pure Equity India Super 50 (IS50) is up 43.7%*

Vs

NIFTY 50 that is up 20.8%

NIFTY 500 that is up 23.9%

The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) is up 21.6%*

Vs

CRISIL Moderate Hybrid Index that is up 18.3%

Since Inception, the volatility for IS50 was 19% as against 31% for the NSE 500 and nearly 48% for the Nifty. The volatility for the IMAAP was a mere 10.4% against 15.4% for the CRISIL Moderate Hybrid Index

*All performance numbers are post fees

 

How to Skate on thinning ice

The first rule for skating on thinning ice, is you need to be light.

As the ice, at least for the US markets, thins, take a look at the people around you, skating on it: most are fat, overfed on easy profits of the past 10 years, and in seriously no condition to be out there skating. At least, not on thinning ice.

Actually, skating on thin ice is a game that involves mathematics and acoustics too. Don't believe us? Read up on the internet. The cracking of the ice has a particular tone when it's about to give.

Both the math (we do a lot of this) and the sounds emanating from the markets have been about the same, for the last few months.

It's our solemn belief that what happened in February, in the last few days, was all set to happen...back in November itself.

Had it not been for that vaccine-induced rally, markets, at least the US, were going to tank.

Almost every price action about the US markets since November, has been worrisome: the slow, grinding upmove. The somnolent FAANMs.

The wholly unjustified Storification & Magnification of Tesla (it's a f.....n car company, for God's sake).

The rally in seriously low quality tech stocks.

The entry of dumb retail into a feeding frenzy of rubbish stocks like Gamestop.

The signs were all there, and we aren't wide-eyed believers of anything.

So, we have kept a defensive stance, largely, light on Tech, light on the Nasdaq, heavy on our TIPP Tech - Tactical Insurance for Portfolio Protection, paying out around 1.7% since November in hedging cost. 

In our Global Fund, GFF-GTS, we sat on a bit of cash too, towards the last week of the month.

The results came through.

What's noteworthy is our repeated assertion that Commodities were a great place to be in, has been on point: our Copper bet, Freeport-McMoRan, has been a stellar performer, our DBC Position, entered back in April 2020, continues to deliver, with Oil being a 40% weight in it.

Calendar 2021 is also shaping up well.

In India, we are CYTD up around 10% vs 5.9% for the NIFTY 500.

Globally, we are up over 3-4% YTD vs 1.9% for the MSCI ACWI and 0.8% for the Bloomberg 80:20 Index (since we rarely run 100% Equity Positions, the Bloomberg 80:20 is a great benchmark).

Don't forget: we have delivered these numbers with a diversified, relatively low-correlated strategy.

Anybody can buy a handful of hot momentum stocks and look good for a while.

Remember Janus in Year 2000?

And recall the massively concentrated bets on Tesla and some other Tech names, by some ETFs.

That isn't investing.

It's gambling.

Big difference. Often ignored.

Global Performance Analysis

We had a decent outing with some of our holdings, with Carnival and Royal Caribbean cruising (low-brow but hard to resist) nicely as below:

Digital Turbine Inc. (+42.3%), Carnival Corp. (+40.9%), Royal Caribbean Inc. (+40.9%), MP Material Inc. (+40.6%) SNAP Inc. (+34.1%), Freeport-McMoRan Copper (+31.0%), Fiverr International (+29.0%), Deere & Co. (+23.5%) and Etsy (+10.6%).

We have comfortable positions in Energy, Financials, Asia-Pac, Global Retail, Global Autos (not Tesla, though we have owned it in the past).

Of course, our REITS have been terrific: we made our move on them last quarter of 2020, and since then, they have been nothing if not excellent.

Overall, we are positioned only about 40% in Global Tech, and extremely watchful.

We don't ever want to get fat, overfed and lazy with easy profits.

India Performance Analysis

In India, the Union Budget on February 1, was a colossal event, one that we will remember a long time.

Our Portfolio rocked, and what's most remarkable is that on the last day of February, when the market fell 3.2%, our Portfolio was down just 1%!

How did that happen?

TIPP and very, very careful portfolio construction (we can't overstress this enough).

Our Top Indian performers were Happiest Minds Technologies Ltd. (+48%), Hindalco Industries Ltd. (+47%), CG Power (+43%), Dixon Technologies (India) Ltd. (+42%) and Deepak Nitrite Ltd. (+42%) - as diverse (and hence low correlated) a bunch as you can think of.

To reiterate, the way we do things around here are:

Our Investing Mantras

 

  • Avoid the Big Losses
  • Be the "House", not the "Gambler"
  • Protect in Down Markets
    Participate in Up Markets
  • Play for Singles. Not for Home Runs
  • Play Everything. Believe Nothing
  • Not Bullish. Not Bearish. Be Hare-ish
  • Great trades are like buses. There's always one coming
  • No Storification. Just Datafication
  • Rigidity Kills. In Arteries. And in Investing

 

Take a look at the Comparative Performance (till January 2021, which we will update once we have February for everybody else)

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And our Human+ Machine delivers these Returns with the lowest possible risk.

As we've said before.

We do not run "High Conviction" risk.

We do not run "Storification" risk.

We do not run "High Concentration" risk.

And yet we deliver.

Or maybe, that's why we deliver.

That is the beauty of our proprietary Human+Machine investment model.

For those who aren't invested with us, but want in, just drop us a line on https://bit.ly/37PMqZW and we will drop you an email, quicker than the recent cricket test match at Ahmedabad.

By the way, you can also WhatsApp us on +91 88501 69753

Chat soon!

From Your Friends at First Global

Trusted Financial Advisors to some of the world's largest Funds, Institutions & Family Offices, for 30 years

https://firstglobalsec.com

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Our January '21 Performance

Global Funds' Performance: January '21

The First Global Global Freedom Fund - Global Tactical Strategies (FG GFF-GTS) is up 1.3% 

Our Global Portfolio product, the GMAAP is up 2.7%

Vs 

MSCI ACWI Index that is down 0.4%

Global Funds' Performance: Calendar 2020 

FG GFF-GTS (US Dollar terms) was up 36.0%

GMAAP (US Dollar terms) was up 35.8%

Vs

MSCI ACWI Index that was up 14.3%

Our performance came with relatively low volatility.

Annualised volatility was around 22% for our products in the turbulent year, 2020, versus 30% for the MSCI ACWI Index and 37% for the S&P 500!

India PMS Performance: January '21

The Pure Equity India Super 50 (IS50) is flat

While NSE 500 is down 1.9%

The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) is down 0.9%

And CRISIL Moderate Hybrid Index (our benchmark for IMAAP) is down 0.5%

India PMS Performance: Calendar 2020

The IS50 is up 31.1%

Vs

NIFTY 50 that is up 15.4%

NIFTY 500 that is up 15.6%

The IMAAP is up 16.5%

Vs

CRISIL Moderate Hybrid Index that was up 15.0%

In 2020, the volatility for IS50 was 19% as against 33% for the NSE 500 and nearly 35% for the Nifty. The volatility for the IMAAP was a mere 10.5% against 16.2% for the CRISIL Moderate Hybrid Index.

Skating well on January ice

What we saw in January was something that has been in the works for the past several months: A general souring of mood. An onset of fatigue. A frenzy of speculation.

A quick look at the Tech heavyweights, from August-September 2020, shows the general lethargy in large cap tech: most, barring Apple, have done nothing since then.

The action shifted to the second and third tier tech names. With some eye-popping returns coming through in the last 2-3 months.

While we have participated in some of the excesses (it is perfectly okay to participate in bubbles. As long as you do not start believing in them!), we have done so with great care and scepticism.

Being wide eyed believers is something that is simply not us.

Therefore from September, we have generally been good boys, and have been careful not to lose money even if it has meant sacrificing some speculative upside.

In line with that general stance, in January, we kept our capital intact in markets that lost capital for people, broadly speaking.

Of course, we would be failing in our duty if we didn't highlight our "Out of the park Winner of the month": Macerich, a REIT. Yes, you read that right. A REIT that doubled in value in a month!

More on this down here.

Global Performance Analysis

Our positioning in our Global Fund and Segregated Managed Accounts-PMS remained largely what it has been over the last few months. Emerging Markets dominate, US is now around 28% weight.

Fixed Income and REITs occupy the largest weight in our allocations, in the past 8 months.

We had some great winners in January.

For example, Macerich: this featured in the hallowed list of "short squeezed" stocks: it's a REIT, paying regular dividend, yielding 7%, and yet, these idiot hedgies were shorting the hell out of it. Serves them right. We gratefully accepted tech-stock returns from our lowly REIT, and exited (+80%).

Others on our January Honor roll were: Bitcoin (MSTR +60%), Palantir (+50%), Jumia Tech (+39%), Tencent (+21%), Meituan Dianpi (+21%), Upwork (+20%), Ganfeng Lithium (+18%), ROKU (+17%) & Hong Kong Stock Exchange (+17%).

Our global spread, across markets and asset classes, helped cushion the creeping ugliness in the NASDAQ.

Added to this global spread, was a layer of Portfolio Insurance, via our TIPP Tech: Tactical Insurance for Portfolio Protection Strategy.

We have had these protections on, since September, and they have helped us in the down months like October '20 and January '21.

As you all well know, the cornerstone of our Investment Management principle is Loss Aversion.

India Performance Analysis

After the October-November '20 silliness of the leveraged financials rally, which we sat out, and gave up some of our gargantuan alpha, India reverted to a more sensible market, from December, which continued into January '21.

The top performing stocks in January for us were Tata Elxsi (+44%), Tata Motors (+31%), Sequent Scientific (+23%), Alkyl Amines (+23%), Balaji Amines (+20%), IndiaMart (+11%), JK Cement (+11%). So, it was a decent outing.

That said, India looked fragile, in relation to other Emerging Markets: hence our stance is to stay away from the area that can inflict the maximum damage: Banks and NBFCs. We own just two small Positions here: Yes Bank and RBL, both offering some optionality in a Sector that remains a volatile, risky space, even now.

Our strategy continues to be one of owning a clutch of low-correlation plays, avoiding higher risk areas of the market, and keeping things tight and safe, instead of loose and unsafe.

To reiterate, the way we do things around here are:

  • Avoid the Big Losses

  • Be the "House", not the "High Rolle"

  • Play Everything. Believe Nothing

  • Stay Nimble. Stay Hare-ish

Take a look at the Comparative Performance till January 2021.

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And our Human+ Machine delivers these Returns with the lowest possible risk.

As we've said before.

We do not run "High Conviction" risk.

We do not run "Storification" risk.

We do not run "High Concentration" risk.

And yet we deliver.

Or maybe, that's why we deliver.

That is the beauty of our proprietary Human+Machine investment model.

For those who aren't invested with us, but want in, just drop us a line on https://bit.ly/3orHmQN and we will drop you an email, as quick as a Bumrah yorker.

By the way, you can also WhatsApp us on +91 88501 69753

Chat soon!

From Your Friends at First Global

Trusted Financial Advisors to some of the world's largest Funds, Institutions & Family Offices, for 30 years

https://firstglobalsec.com

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Can smart Fund Managers create a permanent bull market in your portfolio? 

We absolutely believe they can! 

But first: Why is this question at all relevant?

Well, it is very logical for you to think that markets have gone up a lot and therefore, should you be investing right now or not? 

Many big and small investors have thought exactly like this in the past several months!

Of course, we have seen that markets have kept going up despite all the doubts and scepticism.

As a result of this hesitation, many, many Investors have lost the chance of a lifetime to make massive profits because their Wealth Management Company or Portfolio Management Services Company, failed to guide them on how to create a Permanent Bull Market in their portfolios. 

What is the solution, then?

Let's understand some key things first. 

1. There is nothing called a bull market or a bear market 

There is always a bull market and there is always a bear market coexisting at any point in time. 

What this means is that certain categories of investments will be in a bear market while at exactly the same time, certain categories will be in a bull market!

For example, in the last 10 years: 

  • Emerging markets were in a bear market while US markets were in a bull market. Despite, both being Equities! 

  • Overall, Equities were in a bull market while commodities were in a bear market. 

  • US dollar was in a bull market while Emerging currencies were in a bear market. 

  • In 2020, Indian IT & Pharma stocks had a massive bull market, while simultaneously, Indian Banking had a massive bear market (Bank NIFTY was up just 1-2% for the Year 2020!)

The point that we are trying to make is that of simultaneous Bull Markets and Bear Markets. 

They coexist. All the time.

It only takes deep understanding of markets, to understand this. And exploit it.

2. Smart, proactive Asset & Sector Allocation, coupled with tight, tactical Risk Management can indeed create a permanent bull market for your wealth. 

Do ask: is your investment manager or wealth advisor capable of understanding, and then exploiting these simultaneous, bull markets and bear markets?

Or are they just a one-trick, Equity-bull-market pony? 

Also, the question to ask is: how good is your investment manager at the business of managing risk while continuing to generate Returns.

Allow us to give you some examples of how we do things at First Global:

A.

In India, in the month of February last year, we saw plenty of dangers looming up because of the virus. 

As a result, we immediately took protective action through our Tactical Insurance for Portfolio Protection Strategy: TIPP Tech. And by buying Government treasuries. 

Our TIPP Tech saved our clients from a lot of damage in India as well as in the Global Stock Market.

From that point onward, i.e., March-end, we remained fully invested, riding the entire Bull market.

However, from the month of October, we started to buy a matrix of put options, via TIPP, again which was hedging at different points in time, different elements of our portfolio. 

Therefore, we kept capturing the upside that the markets gave us without running the risk of big losses.

B.

On the Global side where there are far better Risk Management and investment options available, it is so easily possible to diversify beautifully, across the world, into several uncorrelated asset classes, and individual stock Positions, that one can escape big meltdowns: just the massive range of choices available: 13,000 stocks, 100s of Fixed Income and REITs, dozens of commodities (previous metals, industrial, strategic like Rare Earth), all, when combined together into a perfect portfolio symphony, can capture most of available upside, without endangering portfolio safety.

And one can hedge each security, as well as a basket, too! 

Just imagine the flexibility on offer globally!

See how we did it in 2020: 

We moved away from our large American Technology stocks positioning around August last year and we increased our positions in Emerging markets and commodities.

As a result, we have had a very decent run even from the time that the NASDAQ became wobbly, with a flat-lining of major stocks like Amazon, Netflix, Facebook, Microsoft (these stocks have done almost nothing since August 2020!)

This is because we have had commodities that have done very well, we have had Bitcoin which has done very well, and we have had Global REITS that have done very well. 

Therefore, tactically, we left the ageing bull market in FAANG stocks and fully exploited the younger bull market building up in other asset classes. 

Further, our portfolios have been extremely well-balanced, with our overlay of TIPP Tech. 

Therefore we kept capturing most of the upside that was on offer across the world, without running the risk of suffering massive losses, should the market have fallen.

Hence, the way we do things at FG, whether in our India PMS or Global PMS and Global Fund, is completely different from the rest: we are extremely vigilant at all points in time and we keep adding layers of protection of risk management, on an on-going basis.

We always keep scanning the environment for durable shifts in trajectories of asset classes, sectors, countries. 

Then, by tactically hedging our portfolios, through a combination of TIPP Tech and Tightened Stop losses, we almost ensure that even if there is a massive crash, we don't suffer massive losses as other PMS and Funds routinely do. (Some losses can and will happen, of course. We are concerned only about big losses)

This creates sustainable portfolio returns, even if it means foregoing some extra upside, once in a while. 

Nobody minds that!

What should be your takeaway?

Simple: You just need to choose your Investment Manager or Wealth Advisor wisely and then leave the Tactical aspects like asset classes and sectoral allocation, the Risk Management, to that carefully chosen Investment Manager. 

And then only you can enjoy the full benefits that the market offers.

The best Fund Management & PMS Services companies should be able to deliver this tactical Risk Management, that smoothens out your portfolio returns, by prevention of massive losses, thereby creating a near-permanent bull market in your portfolio. 

If they can't ensure this, they don't deserve your wealth.

The key learning for you is that if your choice of investment manager is right, you have solved your entire problem completely with regard to the management of your money/ funds: if your investment manager has the capabilities to navigate good markets and bad markets, that's all the analysis & work you need to do.

For example, If this so-called liquidity-driven market collapses, is your Investment Manager or Wealth advisor already aware of this risk and have they done adequate, proactive Risk Management and sectoral diversification?

Investing Heaven is possible: one can participate in all the Bull markets that are happening in India and globally while not running the risk of massive capital loss: that is what this business of investment  & portfolio management skill is. 

So stop worrying about navigating markets. Stop worrying about whether markets are too high. 

Because that's what our job, as Investment Managers, is. 

And that's what we do the best in this business. 

And to end, this is how one can create a Permanent Bull Market: Smart proactive allocation, and risk management.

That's what Smart Money Managers or Fund Managers do.

We look forward to building steady and safe wealth for you.

If you want any help at all in your wealth creation journey, in managing your Investments, just drop us a line via this link and we will be right by your side, super quick!

From Your Friends at First Global

Trusted Financial Advisors to some of the world's largest Funds, Institutions & Family Offices, for 30 years

https://firstglobalsec.com

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