Dear Fellow Investor,
We hope this message finds you well. We are excited to share some updates and insights with you in our latest newsletter for the quarter and year ended March 31, 2024.
We started PMS Operations from 04 Jul 2023. Since inception, our Equity Strategy Fortuna One has given 31.3% returns (post fees and expenses), generating +7.5% alpha over the Benchmark BSE S&P 500 in the same period.
Our Debt Strategy Fortuna Two consists of G-Sec, AAA and AA+ listed debt securities, with a yield of close to 9.0%, in line with its core objectives of comfortably beating inflation with very low volatility and with very low risk.
We summarize our thinking on the markets, our approach to risk and portfolio construction, and capable addition to Team Fortuna.
Our Thoughts on the Markets
This past fiscal year (FY23-24), the Indian equity markets experienced a remarkable surge, with the BSE S&P 500 index climbing by 39%. This growth has been fuelled by robust macroeconomic factors, strong liquidity both domestically and internationally, and the attractiveness of India compared to other major economies.
However, our investment philosophy is not about following market trends. We focus on deep analysis of individual companies, and staying informed about relevant macroeconomic data that impacts our investments directly. While these are optimistic times, we remain vigilant, aware that over-optimism can often lead to poor investment decisions. We also recognize that historically the worst investment errors are made in the best of times. We, therefore, are cautious, a little more than usual.
Our Focus on Risk as Long-Term Investors
Recent positive returns have led to increased optimism in the markets, nudging risk-tolerance higher. This situation prompts us to critically assess how much optimism is already priced into our investments.
Our goal is to maintain a healthy margin for error, ensuring we are prepared if growth projections and earnings do not pan out as expected. Most of our analysis indicates our investments are on the right track. However, in instances where stock prices are beyond realistic expectations, we have chosen to book profits and return to the safety of G-Sec / AAA Debt.
Currently, cash or equivalent holdings make up 29% of our total portfolio.
Our Approach to Portfolio Construction
Our portfolio strategy remains anchored in fundamental analysis, concentrating on roughly 15 core stocks that make up about 85% of our investments.
Our investment case for each stock includes a core set of operating and financial metrics that we understand well, track diligently, and benchmark with competition.
We continue to work on building investment thesis on cases that we understand well and do substantial groundwork before building positions. We insist on quantifying intrinsic value and an attractive purchase price at the time of entry.
Our work at these times has built further investment cases, but we are not getting acceptable entry prices for deployment. We remain careful in further deployment but will act decisively when we get the opportunity.
We have, during H2 FY23-24, added a Debt Strategy “Fortuna Two”. This strategy focuses on constructing a portfolio of G-Sec, AAA, AA+ Listed Debt, and listed InvIT / REIT Securities to target inflation beating low volatility returns.
We believe a balance of Fortuna One [our Equity long-term focused compounding strategy] and Fortuna Two [our Debt strategy] works better for our clients, especially in these markets.
Strong and Capable Addition to Team Fortuna
We are extremely pleased to welcome Vishal Khandelwal as Partner at Fortuna. Vishal brings over 20 years of experience as a stock market analyst and investor, and over 12 years of experience as an investing coach. He is founder of the immensely popular investor education resource safalniveshak.com with wide following in India and across the globe [it is rated as one of the best Value Investing resources globally]. Vishal is dedicated to helping investors manage their investments better. He is a value investor and educator at heart, and an Adjunct Professor of Finance at FLAME University, Pune.
With his presence, Team Fortuna is stronger, wiser and smarter. We warmly welcome Vishal!
Looking Ahead
At Fortuna, we remain cautious, continue to work on deep fundamental analysis on investment opportunities, and insist on a reasonable entry price across our Portfolio.
We remain consistent on this approach, irrespective of where the markets are. We believe this discipline is essential to achieve superior long-term results for you, our valued client.
Thank you for your trust in us.
