Q1FY21 – Portfolio Performance

The Nifty 50 TRI posted a 23.6% gain in Q1FY21 while the midcap 100 TRI posted a 28.7% gain and the smallcap 100 TRI posted a 31% gain in the same period. The Alphamultiple portfolio was up 20% in Q1FY21.

Alphamultiple Performance

Q1FY21 Performance

Portfolio Performance

While you read this and stare at the numbers on the screen, a +20% and -20% look just normal market movements. But that very moment when your portfolio had melted 30% in just few weeks would have been scary, right? The numbers capture performance but don’t even come close to capturing the volatility.

Alphamultiple Advisors performance review

Performance for the last 4 quarters

Our portfolio fell lesser than the markets fell in Q4FY20 and also rose lesser than the markets rose in Q1FY21. The Q1FY21 surprised most investors as the markets recovered sharply after the crash of March-April 2020. Investors are still wondering what drove the markets up despite the economy being at it’s worst in decades. Countries which had survived the 2008 global financial crash have also contracted because of the lockdowns.

Portfolio Changes

We used the lower prices in March and April to add some bluechip names to the portfolio. We did not make any transactions between 20 April and 20 June, except for taking exposure in the pharma sector. There were a lot of factors which made us stay away from taking up fresh positions in those two months, but the visibility is better now. We foresee a lot of churn in the portfolio coming up in Q2FY20 as we look to book losses in stocks that we have held for the last 2 years. One reason we could add stocks in March and April was CASH.

We had almost 35% of our portfolio in cash before the markets crashed as we believed the market valuations were stretched. In the coming quarters, we are looking to add quality small and midcap names to the portfolio. We believe that over the next 3 years, the small and midcaps would deliver higher returns. The small and midcaps are at cheap to fair valuations. Many largecaps look expensive now.

Note on the economy

We have been getting a lot of queries about the economic outlook, sector performance, impact of Aatmanirbhar Bharat and other geo-political factors. As much as we wish to predict outcomes, these topics are outside our scope of understanding. We will stick to what we believe in – Buy quality stocks at cheap to fair valuations.

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