Minerva India Under-served delivers 663% since April 2011
Though machines can beat the market in most asset classes today, working in the under-served category in an emerging market is an extreme human skill, where machines don’t have the advantage over humans, yet. It’s a lot about forensics and looking for the needle in the haystack of information. This is why sometimes, we enjoy working with specialized fund managers, who are great in their niche and are open to augmentation.
We had the opportunity to work with Piyush Sharma from Minerva India Under-served fund, to assist him with a systematic view on his mandate, his process, simulations and the performance attribution.
Piyush Sharma launched the Minerva India Under-served strategy in 2011. Having spent time with Citigroup and BSE in India, he moved to United States in 2002, where he covered stocks within Business Services, Autos, Consumer Products and Financials with Sanford Bernstein, Longbow Research, and Avondale Partners, working in teams that received accolades from leading institutional research arbiters, including Institutional Investor (II) and Greenwich Associates. Piyush received an MBA from University of North Carolina at Chapel Hill, and BS in Accounting from University of Allahabad.
Over 12+ years, Minerva India Under-served has camped in the institutionally underowned/orphaned part of listed India. Strategy’s highest conviction holdings have materially mis-priced idiosyncrasies, display accounting and structural clarity, are devoid of speculative froth, and yet are institutionally under-owned/orphaned. The fund strategy attempts to capitalize upon flawed overly-generalized narratives around this space. In the process, it has thoroughly debunked the narrative that investing in this space inevitably comes with elevated volatility.
Minerva fund delivered 663% since inception in April 2011. This translated into annualized returns above 18% till end of June 2023. During this period Nifty 50, BSE 500 and BSE Small Cap delivered 10.5%, 10.7% and 11.3% respectively.
The summary below presents 1000 portfolio simulations of Minerva India Under-Served (Minerva fund) alongside Nifty50, BSE Small Cap, BSE Mid Cap, and BSE 500. Among these, Minerva India Under-served had 65% of the data on the positive side of the vertical axis, which separated the data into positive and negative excess returns. Nifty 50 performed the poorest, with only 35% of the data in the desired half.
The information ratio is a financial metric that evaluates the risk-adjusted performance of an investment portfolio or fund. It measures the excess return generated by the portfolio in relation to its benchmark, considering the level of risk taken. Essentially, it helps investors assess whether a portfolio manager is delivering returns that justify the associated risk. A higher information ratio suggests that the portfolio is generating more excess return per unit of risk, indicating effective performance.
Having a higher information ratio indicates that the portfolio manager has successfully generated excess returns compared to the benchmark, considering the associated volatility or risk. A positive and higher information ratio is generally preferred as it signifies outperformance of the benchmark while effectively managing risk.
Typically, an information ratio above 0.5 is considered a strong performance indicator. It suggests that the portfolio consistently generates excess returns compared to the benchmark while effectively managing risk. However, it’s important to consider the investment context and compare the information ratio to industry standards, peer funds, and historical performance.
To obtain the MPT statistics, we ran simulations on real performance data for the fund and its respective benchmarks. The Minerva fund showed an average information ratio above 0.5 for various holding periods.
AlphaBlock Team