Why do we remain invested in White Oak India Pioneers Equity Fund in spite of underperforming the broader market this year?

Dear Investor,

We hope your new year has started well and are looking forward to a phenomenal 2023.

Over the past few months, a lot of you may have been wondering about the underperformance in Whiteoak India’s Pioneers Equity PMS Portfolio. Firstly, we request you to not worry at all. To help address your queries, here’s a small note to help you get a better understanding on why we’re choosing to stick to this fund, which has been chosen based on our 108 point proprietary research framework based on more than a decade of experience and data.

● The Whiteoak (WO) Portfolio has outperformed the benchmark by 2.25% CAGR as of November 30, 2022 since its inception.

● In the interest of long-term sustainability of performance, the portfolio has Relatively higher exposure to small and mid-caps (SMID caps) compared to large caps where India presents the highest alpha-generating potential, with SMIDs having the highest potential within the market.

● The portfolio is currently underweight or even absent in sectors like energy, utilities, and global commodities and by and large avoid government-owned companies (or PSUs) since these businesses tend to have homogenous business models or a common set of drivers grounded in macros and hence do not lend themselves to alpha generation from a stock selection perspective.

● On the other hand, specific sectors like consumer staples and discretionary, private sector banks, healthcare, chemicals, IT Services, etc tends to have heterogeneous business models and provide more opportunities for alpha generation.

● When Small and Midcap continue to underperform large cap for a prolonged period, these usually award the maximum alpha potential and we strive for balance where we are perpetually around 30–50% in small and midcap.

● Owning high governance businesses in the portfolio: Whenever sectors associated with low governance ( Eg: PSU entities, energy, utilities, global commodities) outperform sectors associated with high governance (private sector financials, IT/ITES, consumer, pharma, chemicals, etc, we always stand to underperform in the long term.

● White Oak Pioneers Equity Portfolio has a history of outperforming the benchmark in each of the calendar years (Part 2019, 2020 and 2021) but there were intermittent short periods where it did underperform. Whenever this occurred, over the next 12 months, the strategy outperformed the benchmark by a wide margin basis.

●The White Oak India Pioneers Equity Portfolio has outperformed the Benchmark 100 times on a 3 Years CAGR basis measured daily.

● The Portfolio is still cheaper by 17.0% than S&P BSE Sensex as per OpcoFinco Model (P/FCF Multiple) where S&P BSE Sensex is 44.7% and White Oak Pioneers Equity Portfolio is 37.1%.

Rest Assured, we are working very closely with White Oak’s fund management team to ensure that your portfolio thrives over the long term. Incase you have any further queries, you can always reach out to portfolio@cambridgewealth.in and we’ll get in touch with you to address all your concerns.


Team Cambridge Wealth

Disclaimer: The information, data or analysis does not constitute investment advice or as an offer or solicitation of an offer to purchase or subscribe for any investment or a recommendation and is meant for your personal information only and suggests a proposition which does not guarantee any returns.

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Fisher — Munger — Buffet were sitting around the table - this is what they discussed! Catch our webinar here: https://www.youtube.com/watch?v=3No5-PNVrpw