Change is the only constant – not just a cliché but a critical factor, especially in investing. While the Dow Jones index in the US or Nifty in India has delivered phenomenal returns over the last 20 years, it is important to note that the composition of both indexes has completely changed. New generation fast-growing companies replaced the old generation low/mediocre growth companies. In the absence of such change, returns would have been pathetic and Indexes would have become irrelevant.
A change in macro trends is two-faceted, like a coin – Winners on one side and losers on the other side. Every transformation presents new opportunities which give rise to winners and on the other hand, it dislocates the losers. Investors must appreciate that equity markets are both forward-looking and ruthless. It rewards the disruptors handsomely and punishes the disrupted dispassionately.
Indian economy is also undergoing some massive trend changes across various sectors. These trend changes will accelerate the pace of growth for several sectors/companies. Over the next decade, a lot of these companies will become very large in size (a step jump from being a midcap to large cap or from a large cap to a mega cap). During this process, they would build significant entry barriers thereby enhancing their competitive position and financial strength.
For investors to benefit from this value creation, we would like to introduce our new AIF fund – BITS (also known as – Brand, Internet, Technology and Science). In this fund, we intend to invest in companies that get a leg-up from the BITS theme. Some of the portfolio companies may fit under multiple themes like Brand plus Internet or Technology plus Internet.
In summary, the objective is to create a bouquet of agile, high-quality, and fast-growing companies which eventually would become strong cash generating machines.
