Product Note - Coffee Can

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    Ambit Coffee Can Portfolio

    Investment Objective

    The investment objective of the Ambit Coffee Can PMS is to invest in firms which have consistently delivered healthy fundamentals over long periods of time historically, and have their present organizational DNA robust enough to deliver similar consistency of returns in future as well.

    Portfolio is agnostic to market cap and can invest in companies across large/mid/small cap companies. The objective is to generate healthy portfolio performance with reduced uncertainty regardless of the nature of prevailing macro-economic environment at any point of time.

    Description of Securities and Basis of Selection

    Investments can be made either cash equities or money market instruments to avail the opportunities available in the market.

    Investments in the Coffee Can portfolio are made only in cash equity markets and mutual funds (liquid or overnight). The fund philosophy is against investment in Futures & options, debt or commodity instruments. The investment in equity stocks is based on the proprietary framework adapted by the AMC.

    Allocation of portfolio across types of securities

    As mentioned above, the portfolio is comprised of long only equities from cash markets only.

    Appropriate benchmark to compare performance and basis for choice of benchmark

    Nifty 50 index. The benchmark index has been selected as Nifty 50 as it is the closest resemblance to the underlying portfolio composition.

    Investment Approach and Strategy

    • Our investment approach is to buy shares in ‘great’ businesses for less than they are worth and then to hold on to them for a long time. Our aim is to help our clients generate ‘high return in the most consistent manner, over a long period of time, adjusted for risk’.

    • Our investment approach is built around identifying companies whose DNA is structured in a way that helps them sustain competitive advantages over more than 10-20 years (or longer) consistently.

    • Once we have identified such companies, we do a deep-dive understanding of the competitive advantages and their sustainability in future.

    • Given the nature of companies that we invest in - healthy and consistent cash generation over the longer term - we believe only in DCF (Discounted Cash Flows) methodology for valuations. This approach allows us to factor in the longevity of consistent returns of a business by giving a visibility of how an industry can realistically develop in future and how a company within that industry can evolve.

    Indicative tenure / Investment Horizon

    3-5 years

    Investment Structure and Reporting

    The Ambit Coffee Can Portfolio shall be operated on “Client Level” basis. All investors’ Assets will be in client wise individual separate Bank and Depository Account as the case may be. The Portfolio Manager may at its discretion ordinarily purchase or sell Securities in aggregate for economy of scale and thereafter inter se allocate the same amongst its client on pro-rata basis as per applicable regulations. The portfolio manager shall not hold any securities, belonging to the portfolio account, in its own name on behalf of the clients.

    Additionally, through the Agreement the investor shall provide a Power of Attorney authorizing the Portfolio Manager to perform all his investment decisions and all other obligations.

    All investors shall receive monthly transaction and performance Report. Further, at the year-end an audited performance report specifying the long term, short term and dividend received during the year shall be sent to the investor for assisting him/it to file the returns.

    Eligibility for Investment in the Ambit Good & Clean Mid Cap & Small Cap Fund

    • Resident Individuals, Proprietorship Firms, HUFs, Partnership Firms, Registered Trusts, Corporate, FPI and any other eligible investors.

    • Non Residents Indians (NRIs) are eligible to invest in this portfolio. The portfolios for NRIs shall be managed keeping in view the list of stocks where Reserve Bank of India has barred investments by NRIs. Accordingly the NRIs portfolio may differ to that extent with the other persons in this Product.

    • Furthermore, the individual portfolio of each person may differ based on the various criteria like the corpus amount, residential status or such other criteria, as may be required by the regulations

    • The portfolio of each client may differ from that of the other client in the same portfolio strategy, as per the discretion of the Portfolio Manager.

    Minimum Investment Amount

    To participate in the Ambit Coffee Can Portfolio the minimum investment by the investor shall be Rs. 50 lakhs or as may be provided in the applicable regulations. In the event the Client is interested in investing in the Minimum Investment amount in the form of traded shares or Mutual Fund units, the Client will have to liquidate and make payments to the Portfolio Manager.

    Risks associated with the Investment Approach

    Two risks exist for the portfolio – a) a Marco driven even can drag the overall markets down thus impacting the performance of the portfolio, and b) individual companies may report earnings below expectations, acquire a business, take on debt and such company specific events which are considered normal and they can also impact the portfolio return.

    Risk factor (General)

    All investments under the portfolio are subject to market and other related risks and there is no assurance or guarantee that the value of or return on investments will always be accretive, it could depreciate to an unpredictable extent.

    Withdrawals or Redemption

    Withdrawals from the Ambit Coffee Can Portfolio can be requested on any working day and the liquation for the same may take up to 7 working days to execute depending on the liquidity of the portfolio constituents.

    Additionally for investors whose Portfolio value goes below the minimum threshold as provided in the regulations due to withdrawals as per the aforementioned terms and conditions then the Portfolio Manager will have the discretion to close the investors account by liquidation of his position and / or give the shares of the companies invested in to the client and /or refund the balance

     
     
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