Equinomics: Portfolio Management Services

SEBI Registration No. INP000006208 June 2019

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 Disclosure
Possible Risks involved in becoming PMS Clients of Equinomics
 Only “Linear Equity Fund” Scheme intends to invest a major portion (70%) of the corpus in
the large cap stocks (above Rs.20,000 crore market cap);
 Equinomics’ PMS Fund “Disequilibria” would primarily focus on value stocks largely within
“Linear Fund”
mid-cap and small cap segments. The scheme would invest a small portion of the corpus in
to Focus on the large cap stocks for the sake of some stability to the equity portfolios and also for generating
Large Cap some liquidity from the portfolios, if environment warrants. Otherwise, primary focus would be
Stocks on mid-cap segments;
 By nature, equity asset class is quite risky asset class. Within the equity asset class, the small and
mid-cap stocks are more risky. Hence, only those investors, who can absorb possible higher
“Disequilibria risk to their capital, can subscribe to “Disequilibria” PMS Fund;
Fund” to
Focus on Mid  Conservative investors may consider ‘Linear Equity Fund’ which would largely invest in the large
Cap Segment cap stocks (above rs.20,000 crore);
 However, we will not compromise on the Management quality; Balance Sheet strength; and
Valuation Comfort in stock selections;

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 Equinomics: Who are we?

 The concept of Equinomics comes from Mr. G. Chokkalingam, who has over 35 years of experience in
Economics, Market Research and Equity Research;

 His passion for ‘Equity & Economics’ drove him to open an exclusive boutique equity research &
advisory firm in 2014 under Investment Advisory License from the regulator;

 Name ‘Equinomics’ derives from Equity Economics. Equinomics believes in “Value investing for
Wealth creation in long term through Equinomics’ perspectives”;

 Equinomics Perspective arise from strong fundamental research by using different methodologies to
identify multi-bagger ideas. The different methodologies such as thematic approach, perception
driven PE, bottom-up & top-down approach etc.

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 Equinomics Team
Mr. G Chokkalingam - Chief Investment Officer: Research & Strategy
 Over 35 years of Experience in Economics, Equity Research, Market Research & Knowledge Management
 15 years experience with Enam Group
 Worked with Barclays Wealth, Centrum Wealth, DSJ Group & Institute of Economic Growth

Mr. Nisarg Shah Mr. Sanket Daragshetti Ms. Sampada Mahakal

Fund Manager Fund Manager Equity Advisory
 Over 4 years of  Over 5 years of  10+ years of experience
Experience in Equity Experience in in Corporate Treasury &
Research; Investment Advisory, Financial Service
 Post Graduation Equity Analysis and Industry;
Diploma in Business Portfolio Management  Worked with Syntel and
Management; Services; Sajjan India in the
 Bachelor’s degree in  MBA in Finance from capacity of Manager
Financial Markets from CULC, London. BE Finance & Portfolio
Mumbai University; Mechanical; Manager;
 NISM Certified Research  Earlier worked with  MMS Finance from
Analyst; RBL Bank and Centrum Mumbai University;
 Certified Credit Wealth;  NISM Certified Research
Research Analyst-  Certified Financial Analyst;
CCRA, AIWMI; Planner (CFP);  NISM- Certified
Investment Adviser;

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 Equinomics: Discretionary PMS Funds

‘Equinomics Linear Equity Fund’: Primary Focus on Large Cap Stocks

Equinomics Disequilibria Opportunity Fund’: Primary Focus on MidCap Stocks

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 Discretionary PMS Funds
Allocation to Large versus SMC segments

Exposure Linear Equity Fund Disequilibria Opportunity Fund

Large Cap (Mkt cap > Rs.20,000 crore) 70% 30%

Small & Mid Cap

30% 70%
(Mkt cap <Rs.20,000 crore)

Considering the Primary Focus of ‘Disequilibria’ Fund on the Small & Mid cap space,
Conservative investors are advised to consider ‘Linear Equity Fund’

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 Fund 1: Equinomics Linear Equity Fund
Key Features:

 Primarily a Large Cap Fund: Around 70% exposure to Large Cap stocks (> Rs.20,000 crore of
market cap);

 Around 30% to Small & Mid cap Stocks to create alpha over a period of time; Actively use
Tactical Opportunities created by market forces to enhance portfolio returns;

 Fee Structure: Two Options:

 A Nominal Fee of 1.5% per annum; OR
 A nominal fee of 0.3% per annum with 10% profit sharing over 10% hurdle rate;

 No Brokerage Commission for Equinomics – Trades to be executed directly on main Broker

platform, not through Equinomics as an AP (Authorized Person);

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 Features of ‘Equinomics Linear Equity Fund”

Key Traits of Large cap companies:

• Well established track records of Management;

• Sound financials and balance sheets;

• Relatively Less Governance Issue;

• Demonstrated ability to pay dividends;

• Relatively stable companies as compared to midcaps;

• Wide research coverage;

• Often held by large institutional investors (FIIs, MFs and DIIs);

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 Objectives of ‘Equinomics Linear Equity Fund”

Objectives:

• Cater to Conservatives investors, whose profile suits lesser Risk level associated with the Equity asset
class;

• Try to make nominal returns over market returns with lower risk levels;

• Risk associated with Large cap segment has also increased substantially in the recent period:
• Though the Sensex has fallen just about 9% from its 52-week high, over 60% of Top 100 companies (in terms of market
cap size) fell by 25% to 64% from their respective last 52-week highs;
• Hence, focus on diversified sectors without losing valuation comfort in the Large Cap space;

• Try using 30% of equity corpus for making returns superior to market by banking on value stocks in the
small and mid cap space;

• Also practice tactical opportunities to make use of any possible significant short term gains to remain
ahead of overall market;

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 Fund 2: Equinomics “Disequilibria” Opportunity Fund

Features of “Disequilibria Open-ended Fund”

 Primarily a Mid cap Fund : Over a period of time, around 70% to Small & Mid caps vs 30% to
Large cap;
 Overall limit of up to 30% for the stocks with market cap of above Rs.20,000 crore and up to 70% for the
stocks with market caps in the range of Rs.300 crore to Rs.20,000 crore would be maintained;

 Actively use Tactical Opportunities created by market forces to enhance portfolio returns;

 Nominal Fee of 1.5% per annum;

 No Brokerage Commission for Equinomics – Trades to be executed directly on main Broker

platform, not through Equinomics as an AP (Authorized Person);

 No Profit Sharing;

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 Disequilibria Opportunity Fund
“Disequilibria” Opportunity Fund
 Disequilibrium in stock valuations can be, at times, solely perception-driven. Perception drives UP or Down the prices
more than what stock fundamentals deserve;

 This Fund tries to capture the opportunities created due Valuation Disequilibrium due to adverse Perceptions;

Projection of Future Stock Price = P E x EPS where PE = PRICE / EPS;

Perception Trend Element Fundamental

 Even Infosys became victim of Perception Disequilibria when the CEO quit; same stock gave over 80% return when the
perception on the management stabilized;

 Maruti crashed to around Rs.1400 in early 2014 when perception turned adverse when Suzuki of Japan proposed to set up its
own car manufacturing facility in India – same stock touched Rs.10,000 last year;

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 “Disequilibria” Opportunity Fund

 Primarily a Mid Cap Fund, with maximum exposure to mid- caps and some limited exposure to large caps and small caps;

 Up to 30% exposure will be allocated to stocks having Market cap of Rs.20,000 crore and above at the time of buying;

 Up to 70% exposure will be in stocks above Rs.300 crore but below Rs.20,000 crore market cap at the time of buying;

 Will use tactical opportunities created by market forces to enhance portfolio returns;

Examples of Disequilibrium in stock valuations caused by perceptions turning favourable:

 Cyclical Business: On down-cycle, PE shrinks badly due to adverse perceptions, but expands on upturn. Eg. Hindustan Zinc
moved up from Rs.116 in deflationary conditions (early 2016) to over Rs.330 when metal space turns around;

 BIOCON, was “boring stock” almost for 2 years; Low visibility & valuation despite large cash pile and rich valuation of its
subsidiary. But later visibility jumps and stock also jumps more than 3-folds in less than 3 years;

 Vindhya Telelinks: Substantial growth of telecom business & rich investment in cement company; But takes 2 years to
get its recognition – stock multiplies 3 times in 3.5 years;

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 Key Differentiating Factors

Equinomics Disequilibria
Equinomics Linear
Opportunity Fund
Equity Fund

Open Ended Open Ended

Up to 70% in stocks with market cap Up to 30% in stocks with market cap
more than Rs.20,000 crore more than Rs.20,000 crore
Up to 30% in stocks with market cap in Up to 70% in stocks with market cap in
the range of Rs.300 crore to Rs.20,000 the range of Rs.300 crore to Rs.20,000
crore crore
To be tilted towards Large caps To be tilted towards mid & large mid cap
Single stock exposure would be <=10% stocks
and Single stock exposure would be <=10%
Sector exposure would be <=25% and
Sector exposure would be <=30%
Investment horizon: Aims to
create wealth in 1 to 2 years Investment horizon: Aims to
Designed to take Lower Risk to make create wealth in 1 to 3 years
Modest Wealth Designed to take Modest Risk to make
Management Fee: 1.5% p.a. OR Modest Wealth
Management Fee of: 1.5% p.a.
0.3% per annum with 10% profit sharing
over 10% hurdle No profit sharing

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 Equinomics: DPMS
DPMS
1. Corpus Rs.25 lakh or more
2. Execution By Equinomics
3. Custodial Service Orbis Financial
4.Brokerage Commission No for Equinomics
5. Customization of Portfolio  No, will follow standard model for all investors;
 No interaction with clients on stocks to Buy and Sell;
 Final decision to Buy/Sell by Equinomics Fund Managers;

6. Sector/Stock Concern  Follows Standard Portfolio Model of Equinomics;

 No major deviation;

7. Fees  1.5% p.a for Equinomics Linear Equity Fund or 0.3% p.a plus
10% profit sharing on 10% hurdle.
 1.5% p.a for Equinomics Disequilibria Opportunity Fund;

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 FEE Details for Schemes
Equinomics Disequilibria
Scheme Equinomics Linear Equity Fund
Opportunity Fund
Minimum Initial Investment (Rs.) 25,00,000 25,00,000
Minimum Add-on Investment (Rs.) 50,000 50,000
Upfront Fee (One Time) NA NA
Fee of 0.3% p.a plus 10% profit sharing on 10% hurdle.
Performance Fees NA
OR
Fixed Fees (per annum) * 1.50% 1.50%
Exit Charges
Between 0 to 12 months up to 2% up to 2%
>12 months & upto 24 months up to 1% up to 1%
>24 months & upto 36 months No Exit load No Exit load
Greater than 36 months No Exit load No Exit load
Service Charges for Custody & Fund Accounting Services
Custody Charges 0.02% p.a. on AUC (payable monthly)
Fund Accounting Charges 0.02% p.a. on AUC (payable monthly)
Transaction Charges 0.01% or Rs.25 whichever is lower (per transaction)
Depository At Actual

Includes but not limited to Share Transfer Stamps, Charges payable to regulators, Postage and Courier, Chartered Accountant’s Fees for calculation
Out of pocket expenses
of TDS for NRI clients and any other expenses on Client’s Instructions.

Taxes extra As applicable from time to time at actuals

In addition, account opening charges, Audit Fees, GST or any other such statutory levies or transaction expenses, as applicable will be payable by
Recurring Expenses
the client.
Distribution Charges (on buying / selling)
Equinomics 0%
Broker 0.05% to 0.3%

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 Disclaimer
Equinomics Research and Advisory Pvt Ltd (“Equinomics”) is a registered Portfolio Manager with Securities and Exchange Board of India.
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Investment in any product including mutual fund or in the product of third party service provider does not provide any assurance or guarantee that the objectives of the
product are specifically achieved. Equinomics shall not be liable to client for any losses that you may suffer on account of any investment or disinvestment decision based on
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by wrong or misleading instructions given by you whether orally or in writing.

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 Thank You!!!

Equinomics Research and Advisory Pvt Ltd

Address: 101, Simba, 12, Aradhana Industrial Estate, Off. Western Express Highway,
Near Virwani Industrial Estate ,
Goregaon East, Mumbai - 400063
Ph No. +91-7710074647
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