July was a month of changing narratives for Indian investors. The month began with optimism around easing geopolitical tensions and softer crude prices, but concerns over global trade, oil prices, rupee volatility, and foreign investor flows continued to keep markers cautious. As the Q1 earnings season progressed the focus gradually moved from macroeconomic headlines to the performance of individual businesses. Investors began looking more closely at earnings quality, valuations, and the sustainability of growth. Against the nifty backdrop, Indian equities ended the month on a positive note, with the Nifty 50 TRI gaining 2.36% and the S&P BSE 500 TRI rising 2.19%. Yet a market index can tell only one part of the story. The same market environment can produce very different outcomes across portfolios, depending on the investment universe, portfolio construction, and risk-management framework. At ithought PMS, we believe that investors are not investing merely in a monthly return. They are investing in the process behind the portfolio- the way opportunities are identified, risks are assessed and capital is reallocated as market conditions evolve.
That process begins with flexibility.
A portfolio should not be forced to remain invested in a particular segment simply because of a pre-decided allocation. Solitaire, our flexi-cap approach allows us to look across large, mid, and small cap businesses and direct capital towards opportunities that offer the right balance of business quality, growth potential, balance-sheet strength, management capability, and valuation. This approach was reflected in Solitaire, which delivered 1.75% in July, compared with 2.19% for the S&P BSE 500 TRI. While the strategy returned -2.66% over the past year, its longer-term performance remains stronger, with a 19.40% CAGR since inception in August 2019, compared with 16.17% for the benchmark. Around 79% of the portfolio is invested in debt-free companies, reflecting the emphasis on financial resilience and quality. Its investments span automobiles and ancillaries, capital goods, FMCG, insurance, healthcare, and agriculture. These allocations are actively reviewed rather than treated as permanent positions. As earnings, valuations, and business prospects change, capital can move towards areas where the risk-reward appears more favorable.
This ability to move across the market is valuable, but flexibility does not always mean investing everywhere. Sometimes, the most effective way to manage risk is to narrow the opportunity set and become more selective within it. That is the thinking behind our large-cap strategy Trublu, which operates exclusively within the Nifty 50 universe. Rather than, simply mirroring the index, the strategy follows an elimination-based approach- seeking to own high quality large-cap companies while consciously reducing exposure to businesses with structural weaknesses or the potential to destroy shareholder value. In July, this strategy delivered 2.20% compared with 2.36% for the Nifty 50 TRI. Over the past year. It returned -2.78%, while since inception CAGR from March 2021 stood at 9.57%, compared with 10.63% for the benchmark. The marginal underperformance during the period was influenced by momentum-led phase that favoured stocks outside the portfolio, along with sustained FII outflows from quality large-cap companies where the portfolio remains overweight. However, the objective is not to track the index tick for tick. The conviction lies in the earnings trajectory and long-term strength of the businesses held. Within the large-cap universe, financial services account for 39% of the portfolio, compared with 36% for the Nifty 50. Automobiles and auto components account for 14%, twice the index weight, while oil, gas, and consumable fuels account for 8%, compared with 10% for the index. Together, these exposures reflect a deliberate choice: not merely to own large companies, but to decide where within large caps the portfolio should take risk. The same principle of selectivity becomes even more important when investing in smaller companies.
Unlike established large caps, small, and micro caps businesses can experience sharper price movements and may take longer to be recognized by the market. This is where Vrddhi brings a different dimension to our investment approach. The strategy is built around finding businesses before they become obvious to the market. It is not based on chasing short-term momentum, but on identifying companies with strong cash flows, low-debt, capable management teams, market leadership, and the potential to become significantly larger over time. Vrddhi delivered -0.37% in July, compared to 2.19% for the S&P BSE 500 TRI. Since inception in May 2021, it has generated a 17.16% CAGR compared with 13.78% for the benchmark. Over the past 3 years, the strategy has compounded at 4.20% compared with 11.89% for the benchmark, reflecting the difficult recent period for the portfolio. Around 67% of the portfolio is invested in market leaders, 45% in debt-free companies and 54% in companies without external coverage. Its 5 year ROCE stands at 18.16%. The portfolio’s exposure to chemicals, agro-chemicals, infrastructure, real estate, and capital goods reflects the search for niche businesses that may possess meaningful competitive advantages but remain under-researched or under-owned. Such opportunities require patience. The market may not reward a business immediately, even when its underlying fundamentals are improving. This is why deep research and a long-term investment horizon remain critical in the small and micro-cap segment. However, not every investor’s portfolio needs to rely entirely on equity selection.
Must Watch: Building the Right Portfolio When Market Signals Are Mixed
From Equity Selection to Dynamic Asset Allocation
In a market shaped by changing macroeconomic conditions, asset allocation can play an equally important role. Our multi-asset approach Sphere is designed around this idea. Rather than depending on one asset class or attempting to forecast evert market movement, the portfolio can be repositioned as the opportunity set changes. Sphere delivered 1.03% in July, compared with 1.67% for the NSE multi asset Index 1. Over the past year, it generated 8.77%, ahead of the benchmark’s 6.71%. Since inception in December 2021, the strategy has compounded at 19.81%, compared with 9.89% for the benchmark. During the month, equity allocation remained significant, while debt exposure moved to zero and cash declined to approximately 1%. This reflected the decision to deploy capital into equities following the correction and to improve the portfolio’s overall entry levels. The largest sector exposures within equities were banks at 23%, consumption at 12%, and financial services at 12%, followed by global assets and automobiles. At the same time, positions where the risk-reward has become less attractive were reassessed, creating liquidity that could be redeployed into more compelling opportunities. This is the value of dynamic asset allocation. We do not need to know precisely what the market will do next. We need the flexibility to respond to what the market is already presenting. That same philosophy has been adapted for NRI investors through NIO- NRI Investment Opportunities. While its broader approach is similar, NIO is structured specifically for NRIs and does not have the flexibility to invest in mutual funds. Its multi-asset exposure is therefore built directly through the investment avenues available to NRI investors. NIO delivered 1.30% in July, compared with 1.67% for the NSE Multi Asset Index 1. Over the past year, it generated 2.40%, while since inception in October 2022, it has compounded at 18.79%, compared with 11.41% for the benchmark. Its portfolio has a strong domestic equity orientation, with banks at 25%, consumption at 17% and financial services at 13% as the largest sector allocations. Other exposures include automobiles, metals and mining, and oil and gas. Approximately 96% of the portfolio is invested in equities, with the balance spread across global, liquid and precious-metal exposures. For NRI investors, participating in India’s growth story involves more than identifying attractive companies. The investment structure must also be aligned with their circumstances, access requirements and long-term objectives.
A Process Built for Different Market Conditions
The performance of each portfolio during July reflects its distinct mandate.
One strategy looked across market capitalisations for quality. Another focused on select large-cap businesses. A third searched for under-researched companies with the potential to become future leaders. The multi-asset strategies used allocation decisions to respond to changing market conditions, with one of them designed specifically for NRI investors.
These approaches may differ, but they are connected by a common investment philosophy:
- Understand the business before investing.
- Focus on earnings quality and valuations.
- Give importance to balance-sheet strength.
- Avoid concentration in structural risks.
- Rebalance when the opportunity set changes.
- Use market volatility to reassess and redeploy capital.
- Keep portfolios aligned with investor objectives.
At ithought PMS, the product is only one part of the equation. The larger value lies in the process around the portfolio: regular reviews, transparent reporting, timely capital calls, allocation assessment and continuous evaluation of whether the portfolio remains relevant to the investor’s needs. Markets will always bring new uncertainties. Our role is not to predict every movement, but to ensure that portfolios are actively thought through and positioned to respond.
As we are navigating August, the more important question is not simply, “Where will the market go?”
It is:
“Is your portfolio prepared for wherever the market goes?”
To understand which ithought PMS strategy may align with your investment objectives, get in touch with us now.
