“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”- Albert Einstein
In the realm of investment in stocks, mutual funds, and other options, the primary objective often revolves around surpassing benchmark indices to achieve favorable returns.
One of the widely recognized and referenced benchmark indices is the NIFTY 50, known for its reputation as a haven due to the strong fundamentals and established track record of its constituents.
Among benchmark indices, the NIFTY 50 holds prominence as the most commonly mentioned and utilized index. Its constituents are renowned for their robust fundamentals and proven historical performance, contributing to its status as a safe investment option.
Additionally, the NIFTY Midcap and NIFTY Small-cap indices are worth considering, as they represent stocks with significant growth potential in the Indian stock market. These indices offer opportunities to tap into emerging and promising segments of the market.
But, what if there is a Multicap PMS that encompasses the Nifty 50 stocks fundamentals and stability and provides the potential of the midcap and small cap stocks.?.
Let’s delve into a comprehensive review of the ASK Growth portfolio to determine if this PMS aligns with our investment goals.
What are the pros(advantages) and cons(disadvantages) of this ASK Growth PMS?
Are the returns from this ASK Growth PMS good or bad compared to other investment options like Mutual Funds?
Through this analysis, we will explore the features, performance, and suitability of this PMS and decide if this can be the right investment option.
Before going into this review, please read our article to get a thorough understanding of what a Portfolio Management Scheme is.
Table of Contents
1.)ASK Investment Managers: A Pioneer in Investment Management:
2.)Overview of ASK Growth Portfolio:
3.)Fee Structure of ASK Growth PMS :
4.)Market Cap Allocation of ASK Growth PMS:
5.)Sector Allocation of ASK Growth PMS:
6.)Top Holdings of ASK Growth PMS:
7.)ASK Growth PMS: Who Can Invest?
8.)Selection Methodology of the Stocks
9.)ASK Growth Portfolio Returns Vs Benchmark Returns.
10.)ASK Growth Portfolio Returns Vs NIFTY 50.
11.)Why does ASK Growth PMS underperform?
12.)ASK Growth PMS vs. Actively Managed Mutual Funds.
13.)Taxes within PMS?
14.)ASK Growth PMS vs Marcellus Rising Giants PMS
15.)ASK Growth PMS vs Marcellus Kings of Capital PMS
16.)Final Verdict on ASK Growth PMS: Good or Bad?
ASK Investment Managers: A Pioneer in Investment Management:
The ASK Group is a well-known provider of financial services and a pioneer in the fields of wealth and investment management, serving some of the richest families in India.
It was founded in 1983 and is renowned for its successful multi-family office, asset management, private equity, and wealth consulting operations.
ASK PMS has a long track record of performance, having been launched in 1983. Over the past 39 years, the portfolio has delivered good returns and managed to beat the index in most PMS.
You can refer to the official ASK Investment Managers website for more details about ASK Growth PMS.
Overview of ASK Growth Portfolio:
|Strategy||Category||Fund Manager||Date of Inception||Corpus (In Cr)||Benchmark||Returns SI (CAGR)||Stocks||Sectors|
|ASK Growth Portfolio||Multi Cap||Mr. Chetan Thacker||29-Jan-01||2503||BSE 500 TRI||18.70%||25||8|
- The ASK Growth Portfolio is an early pioneer in the field of PMS Investments having been introduced in January 2001
- The minimum investment amount is ₹ 50 lakhs in ASK Growth PMS.
- Buy and hold strategy with minimal churn is the idea behind ASK Growth PMS.
- The primary investment attribute of the ASK Growth Portfolio is to deliver medium to long-term returns by acquiring growth-oriented stocks at attractive value prices, taking into account their long-term prospects.
- Capital Preservation and Capital Appreciation Over Time are the two main goals of this ASK Growth Portfolio. This is achieved through long-term investments in high-quality companies with strong growth prospects respectively
The 4 main investment objectives of ASK Growth portfolio are
- Size of the Opportunity- Achieved by investing in companies having long runways of growth and dominance in their own sector and higher compounding power when compared to their peers
- Earnings Growth-Achieved by investing in companies commanding higher compounding power and liquidity
- Quality of the business Companies with MOATs and superior ROCE are considered
- Value-Companies with a Favourable Price-Value Gap and a high margin of safety are considered.
Fee Structure of ASK Growth PMS :
|Portfolio Fee||1.5 % of Capital Invested|
|Profit Share||20% of Earned profit if profit is greater than 10%|
Market Cap Allocation ofASK Growth PMS:
Sector Allocation of ASK Growth PMS:
Top Holdings of ASK Growth PMS:
ASK Growth PMS: Who Can Invest?
An ideal investor who can invest in ASK Growth PMS should have the below criteria.
- You are ready to invest a minimum of ₹ 50 lakhs and do not require this money for any sort of requirement so that you can be at peace.
- You have a longer time horizon for investment. The longer the investment horizon, the higher the potential.
- If you wish to exclude top banking stocks such as HDFC Bank, ICICI Bank, Axis Bank, SBI, and Kotak from your portfolio, you may consider this PMS.
- A high-risk appetite and highly patient investor, and be comfortable with the ups and downs of the market and be prepared for potential losses in the short term.
- Trust in Fund Manager: Trust is important to stay committed to the investment strategy and have confidence in the manager’s ability to navigate market conditions effectively.
Selection Methodology of the Stocks
The universe is scanned and companies only in the top 500 companies based on the market capitalization are selected and subjected to the first filtration.
Stage 1: Profit Before Tax (PBT) above INR 200 crs (*at the time of 1st purchase of the stock) for trailing 4 quarters
Stage 2: Then the filtered companies are subjected to a rigorous filter of 25% sustained core ROCE over the last few years.
Stage 3: Along with Stage 2 the companies are also subjected to another filter of 15% Earnings Growth over the next 3 to 5 years. This filters out all the naughty and underperforming companies from the picture.
Stage 4: Management quality is assessed through a subjective evaluation of factors such as integrity, vision, execution capabilities, capital allocation skills, and capital distribution. The stocks are also filtered based on the earnings momentum and Intrinsic values.
Stage 5: Finally 20-25 stocks are selected from the whole universe of more than 500 companies.
ASK Growth Portfolio Returns Vs Benchmark Returns.
The ASK Growth Portfolio has achieved positive trailing returns across all the timeframes, with a max of about 20% post covid.
|ASK Growth Portfolio||5.20%||10.10%||-1.40%||7.20%||5.40%||20.00%||9.10%||16.40%||18.70%|
The overall performance of the portfolio has been strong, with a cumulative return of 18.70% since its inception, attributing its success to its strong core objectives and investment philosophies.
Now let’s compare and see how the ASK Growth portfolio has performed with its benchmark index of the BSE 500 TRI.
Below is the comparison of the ASK Growth PMS’s Returns as of May 31, 2023.
As seen in the above bar chart, the calculated ASK Growth PMS returns beats the benchmark to some extent in the longer time frame.
But it has heavily underperformed the benchmark in all the medium-term timeframes, which doesn’t abode well.
Moreover, drawdowns are also greater in the ASK Growth PMS than in the benchmark index.
ASK Growth Portfolio Returns Vs NIFTY 50.
Let us compare ASK Growth PMS with the NIFTY 50, the most widely recognized and influential benchmark index in the market.
As expected the PMS fares a little better when compared to the Nifty 50 that too only in the longer term and misses out in the medium term. So this PMS is underperforming both the benchmark and the Nifty 50 in the last 4-5 year period.
The persistent underperformance of this PMS compared to its benchmark and the Nifty 50 over 5 years raises concerns and leaves us questioning what factors may have contributed to this lackluster performance.
Why does ASK Growth PMS underperform?
One possible reason for this underperformance of the ASK Growth Portfolio over the past 3-4 years can be partially attributed to its exclusion of top banks from its portfolio.
This is because many banks have experienced significant price increases following the COVID-19 pandemic, and the portfolio’s lack of exposure to these stocks may have impacted its performance.
Most PMSs overlooked the significant surge in Adani group stocks, which contributed to the index’s performance but were absent from the portfolios of most Indian PMS offerings.
Furthermore, the prevailing conditions of high inflation and high-interest rates have led to a regime shift from “growth stocks” to “value stocks,” resulting in subdued returns for growth stocks with elevated valuations and anticipated future cash flows during the period.
ASK Growth PMS vs. Actively Managed Mutual Funds.
We often compare the PMS returns with the equivalent mutual funds.
Though each PMS is benchmarked against its own index by the fund manager itself, this comparison also gains prominence as the PMS are expected to beat the funds given their high fee and operating costs.
Let us now draw a comparison with fellow actively managed Multicap funds
ASK Growth PMS vs Actively managed Multi Cap fund.
|Quant Active Fund||4336.87||36.61%||22.19%||22.55%|
|Sundaram Multi Cap Fund||1905.82||27.26%||13.25%||17.86%|
|ASK Growth Portfolio(PMS)||2503||20.00%||9.10%||16.40%|
When it comes to comparing Multicap funds, a similar narrative unfolds. The Multicap funds have convincingly outperformed the returns of PMS fair and square.
Time to Think Again?
Taxes within PMS?
The returns mentioned earlier are pre-tax returns, and once the impact of capital gains tax is taken into account, the actual return would be lower, resulting in a distinct post-tax return value.
In comparison to mutual funds, Portfolio Management Services (PMS) are typically less tax-efficient, which could potentially lead to a higher tax liability for investors.
Investors should take into consideration the tax implications when assessing PMS returns, as mutual fund investors may benefit from certain tax advantages not available in PMS.
Another important aspect that often goes unnoticed by many investors is the impact of dividend incomes and the associated taxes.
It is crucial to recognize that dividends are added to an investor’s income and subjected to taxation accordingly. Consequently, the net amount received by the investor is further reduced after accounting for these taxes.
ASK Growth PMS vs Marcellus Rising Giants PMS
The ‘Rising Giants PMS’ is all about finding the “Next Big Thing” in the market. You can read the below review to understand the process of ‘Marcellus’ in “Rising Giants PMS”. We have analysed the returns of this ‘Marcellus Rising Giants PMS’ and compared it with many other investment options.
ASK Growth PMS vs Marcellus Kings of Capital PMS
The ‘Kings of Capital PMS’ is all about combining financial service providers with Portfolio Management Services. In the below reviews, we have discussed in detail the good and bad aspects of this PMS.
Final Verdict on ASK Growth PMS: Good or Bad?
ASK Growth PMS boasts a rich history and has established itself as one of the oldest Portfolio Management Services (PMS) in our country.
the PMS has performed a little well, only in the longer timeframe.
However, it is also important to consider the following counterpoints, which form the antithesis.
- The alarming fact about this PMS is that it has failed to outperform both the benchmark index and the Nifty 50 over the past 5-year period. While underperformance over a shorter time period might be tolerable, the prolonged period of underperformance spanning approximately five years raises eyebrows.
- Additionally, the PMS also falls short in comparison to actively managed multi-cap funds. When a mutual fund in a similar category is outperforming the PMS while incurring significantly lower costs, it prompts careful consideration regarding which option would be more advantageous.
- The lack of exposure to top banks may also be a point worth noting. If there is a significant surge in the financial sector and banks experience substantial growth, the PMS may underperform for a longer time period.
- Liquidity concerns of a PMS in general. This lack of liquidity can make PMS a lesser-known choice among investors who prioritize quick access to their funds.
So, in conclusion, it is advisable to look away from ASK Growth PMS and explore cost-effective and liquid options such as active Mutual funds as quoted above or you can search for a better-performing PMS
There are many reviews on social media sites like Quora, Facebook, Twitter, etc, that have exaggerated opinions on this ASK Growth PMS.
Please refrain from following bad advice and wasting your hard-earned money. Consult a professional financial planner to avoid pitfalls in your investment journey!