Samco Mutual Fund has introduced “Stress Tested Investing” with its maiden fund Samco Flexi Cap.
Stress Tested investing is a strategy to put to work money with businesses that can endure and survive in a variety of stressful situations and generate long term risk adjusted returns. Each business is put through a series of six tests defined by SAMCO’s proprietary HexaShield framework and only businesses that pass the HexaShield test shall form a part of the investable universe.
Stress Tested Investing is based on two basic beliefs. First, due to continual disruptions, the lives of businesses have become shorter over time, and organizations must be truly resilient to survive in the marketplace and create shareholder value. Second, the best businesses are the ones that over an extended period can employ large amounts of incremental capital at very high rates of return. Simply put, can they be true compounding machines generating high RoCE and reinvesting at an incrementally high RoCE.
The HexaShield framework from SAMCO is developed to see if a company can withstand a variety of macro and microeconomic stresses and actually be a compounding machine.
The majority of publicly traded Companies fail the stress test. In reality, just 15 of the 50 companies of the NIFTY index satisfy SAMCO’s stress test criteria. Only a small number of companies will be included in the SAMCO Mutual Fund’s scheme portfolio if they pass the stress test verified by the HexaShield framework. These stress-tested businesses have proven to be capable of generating much higher risk-adjusted returns.
Samco Mutual Fund will be the first AMC in India to transparently disclose Active Share daily and endeavours to launch truly active funds with a high active share.
One of the main reasons active funds underperform their benchmark is that the average equity fund manager owns far too many stocks and in effect tracks the index. So, the result is that investors are getting is in fact an index fund less the manager’s fees. This structure makes underperformance against the index inevitable. This phenomenon is referred to as Closet Indexing or Index Hugging.
Jimeet Modi, Founder and Director of Samco Asset Management Pvt Ltd said “SAMCO Mutual Fund promise to investors is to be a truly Active Stress Tested Fund. The world of asset management is going through transformation and SAMCO aims to be at the forefront of leading innovations on the Active segment. We will build funds with high active share so that cost conscious investors get a truly active fund and not a closet index fund when they pay for an active TER and our stress tested investing framework gives the new age investor an authentic and not merely a generic reason to invest with us. Our endeavor would be to generate the highest risk adjusted returns for investors in the long term.”
Anantharaman, Zonal Head, South of Samco Group said “We are excited to expand our business in Kochi and will hire and depute the best teams for catering to the state. The distributors in Kochi will have an exciting product for their investors.”
