Our September '20 Performance
Global Funds' Performance: September '20
The Global Freedom Fund SPC - Global Tactical Strategies SP (GFF-GTS) was down 3.4%
Our Global Portfolio product, the GMAAP was down 4.4%
MSCI World that was down 3.4%
The S&P 500 was down 3.9%
And, the NASDAQ (no benchmark, but still useful to keep an eye on it) was down 5.7%
Global Funds' Performance: Calendar 2020 YTD
GFF-GTS (US Dollar terms): +26.4%
GMAAP (US Dollar terms): +25.8%
MSCI World: -0.8%
The S&P 500: +3.2%
Again, these numbers have come with relatively low volatility.
Annualised volatility has been 24-31% for our products in this turbulent year versus 33.5% for the MSCI World and 42.8% for the S&P 500!
India PMS Performance: September '20
The Pure Equity India Super 50 (IS50) was up 6.1%
While the Nifty was down 1.2%
NSE 500 was down 0.3%
The Asset Allocation India Multi Asset Allocation Portfolio (IMAAP) was up 0.82%
And CRISIL Moderate Hybrid Index was down 0.2% (this is our Benchmark for the IMAAP)
India PMS Performance: Calendar 2020 YTD
The IS50 is up 21.7%
NIFTY 50 that is down 6.5%
NIFTY 500 that is down 6.2%
We are now more than 28% ahead of the market YTD!
The IMAAP is up 10%
CRISIL Moderate Hybrid Index that's up 2.3%
Once again, we have done even better on a volatility adjusted basis.
The annualized volatility for IS50 is 20.9% as against 38.8% for the NSE 500 and nearly 41% for the Nifty. The volatility for the IMAAP is a mere 11.5% against 19% for the CRISIL Moderate Hybrid Index.
Remember how it felt when you entered your mid-forties and were invited to a game of cricket in the neighbourhood. You were playing against kids who were in their teens: with fresh legs, strong shoulders, unlimited stamina, complete arrogance.
You measured your run, did some perfunctory loosening up and then came charging in: the ball went wide outside the off stump.
The slip fielders rolled their eyes. "This old man is over. We just need to make him bowl one over and we put him to pasture at fine leg".
You knew exactly what these idiots were thinking. You have been around the block (or cricket fields) several times.
You dug Deep. You looked at the guy's stance. You knew exactly what he was thinking. You knew his wide open stance made him vulnerable.
And you came and bowled him your best ever late inswing, delivered from wide off the crease, to fox him.
It took his off stump.
Ah... that felt good, didn't it...
September felt like that.
When the young kids start telling you "Hey old man, we know markets better", markets deliver a nice little curve ball.
And trust us: kids haven't the faintest clue how to play these: they have been brought up on a steady diet of easy pickings since April this year.
It is exactly in these situations that the market changes.
And it did.
Markets became tricky. Even treacherous - specially, the US.
India was no better.
But we did okay.
You know why?
Because we are Hares. With Grey Hair.
When things become very easy in investing, you know things are about to become very difficult.
Which is why we were prepared to deal with whatever the markets served up.
You see, we are not the kind of fund managers that crave a flat pitch bull market, in order to make a hundred.
I mean: anybody can make a hundred on a flat pitch. Anybody can make money in a trending bull market.
We actually want, from time to time, tricky markets. That is what really shows up the flat pitch bullies against real skill.
It is these kinds of markets that demonstrate the fact that dumb, passive Investing can beat dumb active Investing.
But dumb passive Investing can never beat smart active Investing.
And what do "Smart, Active" managers have over dumb passive Investing?
Mental Models. Forged over decades of playing on tough tracks.
We have a few, around here:
Avoid the Big Losses
Play Everything. Believe Nothing
Stay Hungry. Stay Hare-ish
First the Big Picture of our September performance.
Global Performance Analysis
By late August '20, the equivalent of the shoe shine boy giving stock tips, had become apparent.
Friends starting sending us their option trading statements, showing us the kind of amazing gains they had been making in the last week of August.
They are not shoeshine boys. They drive Mercs.
But they haven't the faintest clue about option trading.
And now here is where it gets interesting: we have built systems that track the level of speculative activity, quite closely, using a variety of indicators.
By late August, early September, they had started flashing somewhat red.
So what did we do?
Well, we dialed back (a bit) on risk.
We bought some Portfolio Insurance in the GFF GTS.
Over the past couple of months, we had bought some excellent non technology plays.
Therefore we went into September not with the giddy-headed exuberance of the un-initiated, but with the grumbling visage of Constant Questioners.
You see, that's our second BIG Mental Model:
Play Everything. Believe Nothing.
This Mental Model helps. Trust us, this is what has helped us come out ahead of every single major bear market in the past 25 years.
Every single one.
Anyway, let's get back to present day:
Thanks to the kind of protective strategies we put on (in hindsight we should have put on even more), we sat back and saw the NASDAQ plunge around 12-13% in September.
Of course, we took some hits.
But we will take the final September results that came out: down ~3-4% after enjoying a 50% upswing since April, and solid YTD performance.
By the last week of September, we saw with satisfaction that we had largely escaped any significant damage to our accumulated gains.
India Performance Analysis
Our India numbers were... well... bloody good! (Sorry, this is a repeat from the July letter. And the August letter).
On a wide, wide basket of stocks.(Kind of a repeat of the July& August letters).
None of this "small list of high conviction" bs, for us. (Again, this is a straight lift from our July & August letters).
India's pitch was a deceptive one, in September. It was a two-paced. The large caps were hurting. The small were frisky.
In face of such deception, we mixed caution with aggression: we ran with the Hares (we are the Hares), and hunted with the Hounds.
The net result was that, we ended the month 6% up, while the NIFTY and the NIFTY 500, both closed down.
And this, despite having this stock called GMM Pfaudler.
Take a look at the Comparative Performance (till August, 2020, which we will update once we have September numbers for everybody else)
We enjoyed September. We seriously did.
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/2V0RxAx and we will get in touch quicker than the price rise in Ruchi Soya.
By the way, you can also WhatsApp us on +91 8850169753
From Your Friends at First Global
Trusted Financial Advisors to some of the world's largest Funds, Institutions & Family Offices, for 30 years
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