"Confronted with a challenge to distill the secret of sound investment into three words, we venture the following motto, MARGIN OF SAFETY"
-BEN GRAHAM, THE INTELLIGENT INVESTOR, 1949.
Prosperity Discovery Fund
Fund Overview
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Prosperity Discovery Fund is a multi-cap fund that invests in companies across small, medium and large market capitalisations.
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Investments are made in 18 - 25 well researched publicly listed Indian companies, with a maximum allocation of < 7.5% per company at cost.
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Maximum exposure to a particular sector is limited to 25% of the total portfolio at cost.
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PDF's performance is benchmarked against the BSE 500 Total return Index.
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The fund is underpinned by a value investing framework & growth at a reasonable price philosophy.
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We mitigate risk using a core & satellite portfolio management approach.
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Objective of the fund is wealth creation for investors by delivering superior risk-adjusted returns.
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Recommended investment horizon is 3 to 7 years.
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Minimum Investment is INR 50,00,000 for Indian citizens.
Our Investment Philosophy
At Prosperity Wealth Management, our investment philosophy is rooted in the principles of value investing. We believe in strategically allocating capital to companies that not only exhibit robust financial performance but also demonstrate a commitment to sustainable growth. Our approach hinges on identifying enterprises with a solid foundation, characterized by consistent expansion in both top and bottom lines, a resilient balance sheet, minimal debt exposure, and the presence of a durable moat—an enduring competitive advantage that safeguards the business and its margins.
Discerning Entry Points: We seek to enter the market at opportune moments, capitalizing on instances of overcompensation triggered by adverse events, undiscovered business value, or compelling turn-around narratives. This approach allows us to acquire positions at bargain prices, positioning our portfolios for long-term success.
Methodical Exit Strategy: Our commitment to disciplined investing extends to our exit strategy. We aim to exit investments either when the company attains a fair valuation or if there is a fundamental shift in the initial investment thesis. This ensures that our capital is efficiently reallocated and aligned with evolving market conditions.
Ethical Leadership: Integral to our investment philosophy is the conviction that success is best achieved through ethical business practices. We selectively invest in companies led by ethical and competent professionals, recognizing the profound impact leadership has on long-term sustainability and value creation.
Continuous Learning and Adaptability: We value a dynamic and adaptable approach, staying informed about market trends, emerging opportunities, and potential risks. Our commitment to continuous learning ensures that our investment strategies evolve alongside the ever-changing financial landscape.
At Prosperity Wealth Management, we are dedicated to delivering sustainable returns for our clients through a meticulous and principled approach to value investing. Our philosophy is not merely a guideline but a commitment to excellence and integrity.
How do we manage risk ?
Value Investing and Margin of Safety: At the core of our investment philosophy is the practice of value investing. We diligently analyze the intrinsic value of potential investments, seeking companies with strong fundamentals and trading below their estimated intrinsic worth. This approach not only helps in identifying opportunities for capital appreciation but also provides a built-in margin of safety. By purchasing assets with a substantial margin of safety, we reduce the downside risk, as the gap between the market price and intrinsic value acts as a buffer against adverse market movements.
Position Sizing and Sector Limitations: We mitigate risk by carefully managing the size of our positions in individual companies and sectors. By adhering to strict exposure limits, we ensure that no single investment or sector dominates the portfolio, reducing vulnerability to specific company or industry-related setbacks.
Diversification Across Market Capitalization: Our fund spreads investments across various market capitalizations, including large-cap, mid-cap, and small-cap stocks. This diversification helps balance risk and reward, as different-sized companies can perform differently in various market conditions.
Core Satellite Portfolio: We adapt our investment strategy based on market cycles. During bearish macro-economic phases, we maintain a core portfolio of high-quality, stable assets which are relatively less vulnerable to market volatility while simultaneously allocating funds to a smaller satellite portion that offers higher growth potential during market upswings. Varying this ratio of core and satellite holdings helps us take a defensive or aggressive stance in conjunction to the market cycles.
Derivatives for Market Risk Hedging: To hedge against market downturns and limit portfolio losses, we employ derivative strategies to shield investments from market volatility. As a policy and as per SEBI guidelines our derivative strategy is solely employed to hedge market risk and not to lever any investments.