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3 years of our journey so far…. then and now

We are happy to share with you that this month we completed 3 years of our journey and take this opportunity to thank, think/introspect through the 3 years gone by and plan the times ahead with the same enthusiasm as we started off with.

As the saying goes “A journey of a thousand miles begins with a single step”; we started off our journey in May 2019 with a 3-member modest team in a small office at Kanakia Wall Street, Andheri and launched our flagship fund - Carnelian Capital Compounder Fund. It humbly gives us a sense of satisfaction as we look behind and see ourselves now after 3 years… from then to now,

  • Team of 20+ passionate professionals spanning across research, marketing and operations

  • We are now 4 running PMS strategies and 2 AIFs

  • We have consistently communicated with our investors every month with 34 differentiated letters sharing our thoughts on varied topics

  • We have done 5 Wealth Creator Series webinars, wherein we bring CEO’s to directly converse with our clients sharing their long-term vision/strategies as well as their fitment across our IMPRESS framework - includes ICICI Bank, Max Financials, ICICI Prudential, Praj Industries, Ratnamani Metals - we continue to own these names in our portfolio since inception

  • Our Shift strategy has also been rated as the best PMS on absolute returns and best theme identification (post pandemic) in 2021 and been rated as number 2 on the QRC (Quality-Consistency-Risk) framework by the PMS AIF world

  • Both our strategies have delivered a good alpha since inception

  • Backed by our unique CLEAR and PIU framework, we take pride in having no forensic accidents over the last 3 years

  • We pride ourselves in being the first fund to implement complete paperless onboarding for our individual clients

  • We have also created an independent advisory board

Like markets nothing comes in linearity, we too have had our own share of ups and down. We started our fund amidst the ILFS crisis followed by the once in a lifetime crisis revolving around Covid in March 2020, which made it difficult for us to connect with investors and our partners, specially needed for a new start up, but we continued our pursuit with optimism and eyed towards our goal of long-term wealth creation.

These were very uncertain times for our portfolio companies as well - we did a complete stress test for our portfolio companies – revisited our hypothesis, further deep dived on the strength of the balance sheet/cash flows to survive the uncertain environment, etc. Stress testing gave us the confidence to stay invested with most of our portfolio companies amidst pandemic, which eventually worked well for our investors.

Our previous experience in the capital market taught us that every crisis presents an opportunity, and the current crisis was no different….

While working on portfolio companies, we realised that the pandemic would lead to structural shifts in the economy mainly in manufacturing and information technology.

  • We were convinced that the pandemic will accelerate the shift towards manufacturing in India owing to a series of recent structural reforms in the Indian economy coupled with the China+1 theme.

  • Second shift was acceleration in adoption of technology/digital solutions for business – technology was no longer a discretionary spend and it was vital for survival

India has a unique advantage on both – manufacturing and technology.

Playing on our conviction we launched our second strategy Carnelian Shift Strategy – with an objective to invest in emerging leaders in manufacturing and technology.

Identifying and launching the scheme at the right time has yielded good results for our investors. We are proud to share that we have received 2 awards for this strategy as Best PMS on absolute returns and theme identification from the PMS AIF World.

While we understand that the markets have always been and will continue to be volatile and will have its share of ups and down, we have stayed the course throughout by implementing and focussing on the investment process and framework we have outlined for ourselves which has served well for us in the last 3 years and further instils more confidence in us to follow the same going ahead.

We have always kept our investors interest first, we realised that onboarding our clients was tedious and was taking too long besides being cumbersome; we were the first in the industry to onboard individual clients using Aadhar based OTP (online verification) which has resulted in reduction of time to almost 2 days at the same time making the onboarding process a lot easier for our individual clients. Now let me switch the lens towards what has not worked or could have been better.

What has not worked/could have been better

Prior to starting Carnelian, we had zero experience in managing third party money and complexities of portfolio management which is significantly different from investing and bottom-up stock picking. We had to learn and make tweaks to our approach as we went along.

We also realised some delays in executing buy-sell decisions despite of strong conviction mainly due to an investment committee approach and at times our value conscious approach. We also faced issues with model portfolio approach where an incoming client had to buy existing stocks which in few cases offer relatively inferior risk reward metrics because of the price movement.

We also had our share of small accidents with few of our portfolio companies owing to external/internal factors like pollution accident, semi-conductor shortage, raw material shortage sudden departure of CEO. However, wherever we were convinced that the issues were structural we have exited the stocks.

We made several appropriate changes that were needed. It is a continuous learning process and we do not have any apprehensions in admitting the same and constantly improving.

To guide us through our journey, we have also created an independent advisory board of accomplished professionals - Ms Patricia Perez Couttez and Mr Vivek Chachi who are veterans in the money management business.

We have also built portfolio level analytics. Over the last 3 years, we have built various frameworks on portfolio risk metrics.

We have also come out of the investment committee approach for day-to-day portfolio matters which has helped us taking more timely decisions. However, the process of accepting new names in our approved list has still to go through a multi-step rigorous process adhering to the CLEAR and PIU framework. On our model portfolio - we have created multiple model portfolios with few deviations w.r.t the original model portfolio to cater to the interest of incoming investors on a risk-reward metrics.

Managing our investor’s hard-earned money is a very serious responsibility on our shoulders and we will keep working relentlessly to achieve our goals of delivering superior risk adjusted return over a long period of time.

While we have travelled a few miles in our journey of building Carnelian, the journey is long & far. Over the next 3 years we aspire to build an organisation with

  • A team with continued focus and commitment to add value to our customers

  • A team with a passion to excel, perform and win

  • A customer base which trusts us for their generational wealth

  • A group partners who are willing to endorse & recommend us without any hesitation

It’s said – “Well-wishers are like beautiful streetlamps. They cannot make our distance shorter, but they can lighten our path and make the journey easier.”

We continue to seek your support and blessings and find our well-wisher within you.

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