Marcellus Rising Giants PMS: Decoding with a Comprehensive Evaluation & Review

We all dream of discovering the next HDFC Bank or next TCS or identifying a multi-bagger stock that generates substantial returns over time.

But why? Because Such companies offer a blend of growth potential, market stability, and opportunities for value creation.

Imagine how relieving it would be to invest in a company that has passed that t initial start-up phase and have solid revenue streams, proven business models, and a market presence that provides a level of stability compared to smaller companies.

But, how can we find that “Next Big Thing”?

While finding such opportunities is challenging, thorough research, analysis, and a long-term investment horizon can increase the chances of success.

What if a PMS promises to find you the “Next big thing in the stock market”?The PMS is “Marcellus Rising Giants”

TABLE OF CONTENTS

Understanding the “Rising Giants” PMS of Marcellus
Marcellus – How did it begin?
Investment Philosophy of Marcellus
Overview of Marcellus Rising Giants PMS
Fee Structure of Marcellus Rising Giants PMS
Who can invest in Marcellus Rising Giants PMS?
How are the businesses screened? The 5-stage approach of Marcellus!
Marcellus ‘Rising Giants’ Portfolio Returns Vs Benchmark Returns
Marcellus ‘Rising Giants’ PMS Portfolio Vs Nifty Next 50
Marcellus ‘Rising Giants’ PMS vs. Other Actively Managed Funds
How does Marcellus ‘Rising Giants’ PMS compare to Mutual Funds in the tax segment?
Marcellus Rising Giants PMS vs Other Marcellus PMS

• Marcellus Rising Giants PMS vs Marcellus Kings of Capital PMS
• Marcellus Rising Giants PMS vs Marcellus Consistent Compounders Portfolio
• Marcellus Rising Giants PMS vs Marcellus Little Champs PMS

Final Verdict on Marcellus Rising Giants PMS
conclusion

Understanding “Rising Giants” PMS of Marcellus

This Marcellus PMS “Rising Giants” intends to invest primarily in high-quality mid-sized companies which are less than Rs 75,000 crores market-capitalization, predominantly in the Rs 7,000 crores – 75,000 crores range.

But before reading this review you should be clear about what is a Portfolio Management Scheme.

Let us delve into a comprehensive study of PMS, “Rising Giants”.

By examining its pros and cons and comparing it against relevant market indices, we will assess which option offers superior investment potential.

Also, please read the official brochure(pdf) of Marcellus “Rising Giants” PMS to get a better perspective regarding this review.

Let’s begin!

Marcellus – How did it begin?

To help both individual and institutional investors manage their equity portfolios.

Marcellus Investment Managers was founded in 2018 by Saurabh Mukherjea, Rakshit Ranjan, and Vivek Misra, who are well-known figures in the Indian financial industry with extensive experience in fund management and research.

Investment Philosophy of Marcellus

The firm follows a concentrated, long-term, and high-conviction investment approach.

Marcellus’s client base primarily includes high-net-worth individuals, family offices, and institutional investors.

Marcellus aims to identify and invest in quality businesses with sustainable competitive advantages, strong management teams, and attractive growth prospects.

Marcellus focuses on investing in Indian companies across various market capitalizations, with a particular emphasis on mid and small-cap stocks.

Overview of Marcellus Rising Giants PMS

Strategy	Category	Fund Manager	Date of Inception	Age Of PMS	Corpus (in Cr, approx)	Benchmark	Returns SI (CAGR)	Stocks In Portfolio
Marcellus Investment Managers Rising Giants	Multi Cap	Ashvin Shetty	13th Aug 2021	1Y 10M	1200	BSE 500 TRI	-15.7%	15-20

• • The minimum investment amount is ₹ 50 lakhs in Marcellus Rising Giants PMS.
  • 2% of AUM withdrawn if investments are withdrawn within 15 months from the date of investment.
  • Marcellus Rising Giants PMS follows a simple investment philosophy: They invest in companies that have clean financial records, operate in niche markets with strong competitive advantages, and effectively allocate their capital for growth.
  • It is a portfolio of High-quality mid-sized companies that have been amongst the largest wealth creators in Indian equities. The listed Indian companies with market caps between USD 500 million and USD 10 billion make up Marcellus Rising Giants.
  • The stocks are chosen based on the ‘Longevity’ and EPS growth prospects and by adopting a ‘Discovery’ framework i.e. growth accompanied by improving profitability and improving free cash flow.
  • This PMS is a concentrated 15-stock portfolio with the top 4 stocks accounting for around 40% of the portfolio. The following five Marcellus Rising Giants stocks (sizing ranks 5-10) make up about 30% of the portfolio. Sizing ranks 11-15 accounts for the final 29% of the portfolio.

  Fee Structure of Marcellus Rising Giants PMS

  Options	Rate
  Fixed fee	2%-1.25% p.a. with Zero profit sharing for different slabs from 1Cr-25 Cr
  Hybrid model	1.25% -0.5% p.a. fixed fees with 10%-5% profit sharing for different slabs from 1Cr-25 Cr

  Operating Expenses for a Marcellus Rising Giants PMS:

  S.No.	Description	PMS with Kotak, ICICI, Axis custody	PMS with HDFC custody	Remarks
  1	Set-up costs (Notary + Stamp duties)	Rs. 1,750 (NIL for STP)	Rs. 1,750 (NIL for STP)	One Time – First Invoice
  2	Brokerage Cost	10bps + STT + Govt Levies	10bps + STT + Govt Levies	As transacted on txn value
  3	Custody Charges	3.0 bps PA	18.0 bps PA	Quarterly – on average daily AUM
  4	Fund Accounting Charges	3.0 bps PA	3.0 bps PA	Quarterly – on average daily AUM
  5	Annual Client CA Certification	Rs 1,000	Rs 1,000	Annually-end of the year
  6	Bank Charges	At actuals	At actuals	At actuals

  Market Cap allocation of Marcellus Rising Giants PMS:

  

  Top 5 Holdings of Marcellus Rising Giants PMS:

  

  Top Sector Allocations of Marcellus Rising Giants PMS:

  

  Who can invest in Marcellus Rising Giants PMS?

  • An ideal investor who can invest in Rising Giants PMS should have the below criteria.
  • You have to be a high-risk appetite and highly patient investor, as the turnaround story for developing stocks may take years.
  • You should be a Volatility-Conscious investor as one bad quarter can trigger a significant decline in stock prices.
  • You are ready to invest a minimum of ₹ 50 lakhs.
  • You have a longer time horizon for investment.
  • Trusting the PMS and the fund manager until you arrive at your corpus.

  Even if you fulfill all these criteria, is it still worth your hard-earned money to invest in this PMS? Read to find more!

  How are the businesses screened? The 5-stage approach of Marcellus!

  Let’s now delve into the most important part of how Marcellus filters their stocks from the whole universe.

  Stage 1: The universe is scanned and companies only in $500 Mn-10bn Market cap are selected

  

  Stage 2: Forensic Screening.

  

  Marcellus study the companies filtered in stage 1 with further credential checks for accounting and governance. Around 40% of companies drop out from the universe in this filter

  Stage 3: Fundamental Checks

  

  Using defined thresholds on revenue growth, margin improvement working capital, asset turns, RoCE, and cash generation to identify companies that are scaling rapidly and sustainably. 50 % of companies fail here and are dropped.

  Stage 4:

  

  To further support their argument regarding the chosen stocks, Marcellus then does a thorough review of annual reports, conference calls, management interviews, and other published materials. Only the top 10% of companies are subjected to these checks.

  Stage 5:

  
  In the final stage, Marcellus looks for 3rd party checks in addition to the company-provided information.

  Marcellus does not solely rely on company-provided information. They conduct independent research with the help of information from industry experts, suppliers, customers, competitors, and other sources.

  In this way, they gain a more comprehensive understanding of the company’s operations, market position, and management quality

  Finally ~15 stocks are selected from the whole universe of more than 450+ companies.

  Marcellus ‘Rising Giants’ Portfolio Returns Vs Benchmark Returns

  The Rising Giants portfolio has given us utter negative returns over several months and the overall returns since inception is down by about 15%.

  Trailing Returns (%)	1m	3m	6m	1y	2y	3y	5y	10y	Since inception
  Rising Giants PMS	4.70%	3.50%	-6.20%	-2.80%	–	–	–	–	-15.70%

  Now let’s compare and see how Rising Giants portfolio has performed with its benchmark index.

  The comparison of the PMS returns as of May 31, 2023, is shown below.

  

  • Upon reviewing the performance of the PMS, it becomes apparent that it has consistently lagged behind the BSE 500 TRI benchmark.
  • The returns since its inception are notably poor compared to the benchmark index.
  • The drawdowns are also notably high in the Rising Giants portfolio when compared with the benchmark.
  • Regrettably, the PMS falls short of the expected standard where it should ideally surpass its benchmark indices in terms of performance.

  This PMS can’t even surpass the benchmark returns! Do you still think this Marcellus ‘Rising Giants’ PMS can find you the ‘Next Big Thing’ in the market?

  Marcellus ‘Rising Giants’ PMS Portfolio Vs Nifty Next 50

  Ok, the Rising Giants portfolio didn’t beat its benchmark index. But how did it fare against its fair comparison index, the Nifty Next 50? Now let’s go a step further and do a comparison with the Nifty Next 50 over the same period and see if we were able to beat it.

  

  As we see above, the Rising Giants have underperformed the Next 50 by quite a big margin.

  But, what is the reason for this underperformance?

  Marcellus Rising Giants PMS is believed to have purchased these companies at a very high price at the time of covid. Now, after a state of normality post covid, the stocks are undergoing a period of consolidation. This is said to be the reason for diminished returns!

  Marcellus ‘Rising Giants’ PMS vs. Other Actively Managed Funds

  Moreover, when we compare the returns of the Rising Giants PMS with actively managed Midcap Mutual funds over one year, we observe a significant difference or gap.

  

  How does Marcellus ‘Rising Giants’ PMS compare to Mutual Funds in the tax segment?

  The previously mentioned returns are pre-tax returns, and considering the impact of capital gains tax, the actual return would be lower, resulting in a different post-tax return value.

  In comparison to mutual funds, Portfolio Management Services (PMS) are typically less tax-efficient, which could result in a larger tax burden.

  Mutual fund investors may enjoy tax benefits not accessible in PMS, so investors should consider tax implications when evaluating PMS returns.

  Marcellus Rising Giants PMS vs Other Marcellus PMS

  • Marcellus Rising Giants PMS vs Marcellus Kings of Capital PMS

  “Marcellus Kings of Capital” is based on the banking sector while “Marcellus Rising Giants PMS” is based on finding the ‘next big thing’ in the market. Both these PMS differ in their basic themes.

  Marcellus Kings of Capital PMS: An In-Depth Analysis! Is It Worth Investing?

  • Marcellus Rising Giants PMS vs Marcellus Consistent Compounders Portfolio

  ‘Marcellus Consistent Compounders Portfolio’ predominantly focuses on Large Cap funds while ‘Marcellus Rising Giants PMS’ invests in high-quality mid-sized companies

  Marcellus Consistent Compounders Portfolio: PMS Review- Should you Invest?

  • Marcellus Rising Giants PMS vs Marcellus Little Champs PMS

  Even though the investment amount is the same in both the PMS (Rs 50 lakhs)

  while the fixed fee of ‘Marcellus Rising Giants PMS’ is 2%-1.25% p.a. (with Zero profit sharing for different slabs from 1Cr-25 Cr) with an additional hybrid model.

  ‘Marcellus Little Champs PMS’ Fixed fee is 1% (quarterly) with a variable option.

  Marcellus Little Champs PMS: Should You Consider Investing? An In-Depth Review

  Final Verdict on Marcellus Rising Giants PMS

  While a one-year performance review of a Portfolio Management Service (PMS) may not provide a comprehensive view, it is currently not advisable to consider the Marcellus Rising Giants PMS.

  We have solid reasons for this, they are

  • Despite being a relatively young PMS, it has failed to impress investors thus far, as the overall portfolio value has experienced a decline of approximately 15%.
  • Huge concentration risk. The top 4 stocks account for around 40% of the portfolio. Due to this concentration, any issue with one of these 4 stocks would have a huge implication on the CAGR.
  • Some of the stocks seem to be overvalued at the time of purchase. The PE value seems to be 58x when the stocks were bought. This is thought of to be the reason for the underperformance of the fund.
  • The primary goal of investing with reputable fund managers and PMS is to achieve substantial returns on your investments. when you have already paid a significant fee plus the PMS operating fee but have yet to witness any returns from your investment, just imagine how disheartening this would be!
  • Portfolio Management Services (PMS) in general can have lower liquidity compared to mutual funds.
  • There may be restrictions or lock-in periods when attempting to redeem your investments in Portfolio Management Services (PMS).

  Considering the underperformance and liquidity concerns associated with PMS, it might be prudent to explore alternative options such as lower-cost thematic funds, especially if you have a specific preference for a portfolio focused on a particular theme or sector.

  Conclusion

  So, in conclusion, if you are seeking to diversify beyond mutual funds and pursue aggressive returns, it is advisable to look away from Marcellus Rising Giants PMS and explore alternative options such as more consistent-performing PMS or thematic funds.

  There are many reviews on social media sites like Quora, Facebook, Twitter, etc, that have exaggerated opinions on this Marcellus Rising Giants PMS.

  Please don’t fall for amateur advice and lose your hard-earned money. Consult a professional financial planner to avoid pitfalls in your investment journey!