BRICS PMS Performance Update - 31 August 2010

MULTIPLE -STRATEGY
TREND RATED
AUTOMATIC TRADING SYSTEM
Portfolio Management Services (PMS)
Performance Update
31 August 2010

Vivek Mavani – Vice President and Senior Portfolio Manager

BRICS Growth Synopsis

 BRICS Growth is a Long only Diversified Equity Product aimed at generating Absolute Returns

 The Objective is:

 Generate Steady & Consistent returns over medium to long term

 Low Volatility

 Cautious on Margin of Safety

 The Focus is therefore on Stock Picking with a Buy and Hold philosophy

 Invest in high quality and high growth companies at reasonable valuations and hold them
over a period of time. (Not trade in & out frequently)

 Our conservative approach to managing investments, (especially during periods of volatility) is
reflected in our superior performance.

Absolute Performance – 31 August 2010

YTD Since
Weekly Monthly Quarterly Half Yearly
(Calendar) Inception

BRICS Growth -0.49% 7.25% 17.84% 32.34% 30.88% 42.00%

NIFTY -1.87% 0.65% 6.21% 9.75% 3.87% 6.28%

SENSEX -1.86% 0.58% 6.06% 9.38% 2.90% 4.88%

S&P CNX 500 -1.89% 1.39% 7.35% 9.93% 4.81% 10.15%

S&P CNX MIDCAP -2.93% 3.14% 11.91% 21.10% 16.78% 29.59%

Inception Date: 1 October, 2009 Portfolio returns are audited and net of fees & expenses

Performance Snapshot
45%

40%

35%

30%

25%

20%

15%

10%

5%

0%
Monthly Quarterly Half Yearly YTD (Calender) Since Inception

BRICS Growth NAV Nifty Sensex S&P CNX 500 CNX Mid Cap

Inception Date: 1 October, 2009 Portfolio returns are audited and net of fees & expenses

Consistency in our Month-on-Month Performance

Performance ahead of benchmark indices month after month
Month BRICS Growth Nifty Sensex S&P CNX 500 CNX Mid Cap

Oct-09 -0.67% -7.31% -7.23% -6.46% -1.77%

Nov-09 2.79% 6.81% 6.48% 7.59% 8.65%

Dec-09 6.27% 3.35% 3.18% 4.43% 3.97%

Jan-10 -1.84% -6.13% -6.34% -4.00% -3.11%

Feb-10 0.75% 0.82% 0.44% -0.69% -0.48%

Mar-10 6.24% 6.64% 6.68% 4.50% 7.50%

Apr-10 3.77% 0.55% 0.18% 1.27% 4.62%

May-10 1.86% -3.63% -3.50% -3.24% -3.79%

Jun-10 5.81% 4.45% 3.83% 4.59% 4.83%

Jul-10 3.84% 1.04% 1.56% 1.23% 3.50%

Aug-10 7.25% 0.65% 0.58% 1.39% 3.14%

Month on month comparison

10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

-8%
Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10

BRICS Growth Nifty Sensex S&P CNX 500 CNX Mid Cap

Compared to Top 20 Mutual Funds
Ranked on 1 month returns
Rank Scheme Name Performance
1 Month % 3 Months % 6 Months %
1 Brics Growth 7.25 17.84 32.34
2 HDFC Long Term Equity Fund - Growth 5.09 13.15 22.05
3 DSP BlackRock Equity Fund - Growth 4.77 12.37 20.13
4 HDFC Growth Fund - Growth 4.06 11.97 22.40
5 IDFC Premier Equity Fund - Plan A - Growth 4.03 19.19 26.99
6 SBI Magnum Global Fund 94 - Growth 3.98 13.91 20.55
7 HDFC Equity Fund - Growth 3.95 13.45 22.31
8 Quantum Long-Term Equity Fund - Growth 3.73 12.45 20.52
9 Canara Robeco Emerging Equities - Growth 3.69 14.73 28.77
10 Reliance Equity Opportunities Fund - Growth 3.63 14.85 25.76
11 Fortis Future Leaders Fund - Growth 3.53 13.17 26.82
12 Franklin India High Growth Companies Fund - Growth 3.51 12.09 15.02
13 DSP BlackRock Opportunities Fund - Growth 3.17 11.48 20.78
14 Tata Select Equity Fund - Appr 3.15 9.35 14.32
15 DSP BlackRock India Tiger Fund - Growth 3.08 9.81 16.30
16 Franklin India Prima Fund - Growth 3.00 12.61 20.49
17 Kotak Emerging Equity Scheme - Growth 3.00 14.41 23.90
18 Morgan Stanley A.C.E Fund - Growth 2.60 11.61 17.64
19 Templeton India Growth Fund - Growth 2.56 7.40 13.25
20 Morgan Stanley Growth Fund - Growth 2.44 9.37 14.45

The comparison includes 250 Diversified Equity Funds across all Fund Houses

2 Brics Growth 7.25 17.84 32.34
13 Franklin India High Growth Companies Fund - Growth 3.51 12.09 15.02
17 JPMorgan India Equity Fund - Growth 1.80 10.20 18.30
18 Fidelity Equity Fund - Growth 1.36 9.84 19.54
19 DSP BlackRock India Tiger Fund - Growth 3.08 9.81 16.30
20 Franklin India Opportunity Fund - Growth 2.33 9.81 13.35


1 Brics Growth 7.25 17.84 32.34
7 Escorts Growth Plan - Growth 1.66 9.09 23.00
16 ICICI Prudential Fusion Fund - IP - Growth 1.36 9.22 19.85
17 Fidelity Equity Fund - Growth 1.36 9.84 19.54
18 JPMorgan India Equity Fund - Growth 1.80 10.20 18.30
20 Fidelity India Growth Fund - Growth 0.69 9.41 17.62


BRICS Growth NAV Trend

 BRICS Growth has delivered steady & BRICS Growth NAV v/s Indices (normalised)
consistent returns during both periods: 150

 of range bound market with sharp 145
volatility between October 2009-May 140
2010 135
130
 and when markets witnessed sharp
rally between May-August 2010 125
120
 Performance has been a result of our :
115
 Stock Picking 110
105
 Low churn in the portfolio and,
100
 Conservative attitude (not taking 95
excessive risks)
90

 Leading to consistently increasing out- 85

1-Dec-09

1-Aug-10
1-Jul-10
1-Apr-10
1-Feb-10

1-Mar-10
1-Jan-10

1-May-10

1-Jun-10
1-Nov-09
performance of returns as compared to the 1-Oct-09
benchmark indices
BRICS Growth Nifty Sensex
S&P 500 CNX Midcap

BRICS Growth Outperformance

 Our out-performance has been increasing BRICS Growth NAV Outperformance vis-a-vis Indices
over a period of time 45%

 Our Strategy has been to : 40%

35%
 Buy only during panics
30%

 Use sharp rallies to partially book 25%
profits
20%

 Remain liquid in the interim 15%

 Large liquidity helps : 10%

5%
 Protect against volatility
0%

 Provides enough courage and -5%
conviction to buy into panics
-10%

1-Nov-2009

1-Dec-2009

1-Feb-2010

1-Mar-2010
1-Oct-2009

1-Apr-2010
1-Jan-2010

1-Jun-2010

1-Aug-2010
1-Jul-2010
1-May-2010
 Current cash/liquid balances ~ at 25% of
the Portfolio

Nifty Sensex S&P 500 CNX MidCap

Portfolio Breakup

Sectoral Allocation Market Cap Breakup
Banking &
Oil & Gas Finance Cash
23% 13% 25%
Large Cap
Branded 32%
Garments
& Retail
15%
Media
6%
Infrastructure
4%
Small Cap
18%
FMCG Cash
14% Mid Cap
25%
25%

Large Cap. More than Rs 5,000 crores
Mid-Cap Rs 1,000 - 5,000 crores
Small Cap. Less than Rs 1,000 crores

Low Portfolio Turnover (Buy & Hold at work)

Portfolio Turnover
1.00

0.80

0.60

0.40

0.20

0.00
Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10

Portfolio Turnover Average turnover

10 Biggest falls since October 2009
 How much a portfolio falls during a Points Points % Fall -
correction / sharp downturn is as % Fall - % Fall -
Date Fall - Fall - BRICS
important as how much it gains in a bull Nifty Sensex
market Nifty Sensex Growth

 Protecting capital is often more important 27-Jan-10 -159.65 -3.19% -490.64 -2.92% -2.29%
during periods of volatility
03-Nov-09 -147.80 -3.14% -491.34 -3.09% -0.36%
 Downside protection equally contributes
to superior returns over a period of time 19-May-10 -146.55 -2.89% -467.27 -2.77% -0.84%
 We have managed to fall less than the 25-May-10 -137.20 -2.78% -447.07 -2.71% -1.62%
indices during each of the sharp falls /
panics since our inception 05-Feb-10 -126.70 -2.61% -434.02 -2.68% -0.47%

27-Oct-09 -124.20 -2.50% -387.10 -2.31% -0.65%

21-Jan-10 -127.55 -2.44% -423.35 -2.42% -1.32%

01-Jun-10 -116.10 -2.28% -372.60 -2.20% -1.24%
Against -- Nifty Sensex
26-Nov-09 -102.60 -2.01% -344.02 -2.00% -0.95%
Beta * 0.4075 0.4068
07-Jun-10 -101.50 -1.98% -336.62 -1.97% -0.99%
*Beta measures the volatility of the
portfolio relative to the index 04-Feb-10 -86.50 -1.75% -271.10 -1.64% -0.28%

Market Outlook

 Global macro economic risks will continue to weigh on the markets. Will definitely have
repercussions on India over a period of time, if not on a daily basis

 Rest of 2010, markets are likely to remain range bound within 10-15% with sharp interim
volatility. Short term we maintain a view of negative bias and perhaps a sharp correction

 Overall Valuations are reasonable, but definitely not cheap
 In some sectors/stocks valuations already factor in fairly aggressive growth rates for FY11
and FY12. Corporate performances could disappoint in those cases given high
expectations
 Q1 FY2011 results have just about met the expectations. In fact most sectors under-
performed the expectations on profit margin front.

 Corporates that have delivered/exceeded expectations have witnessed significant re-rating in
the last one year and have had a sharp bounce back after each panic/fall

 However, markets have also been very discriminative against corporates under-performing
expectations. As a result markets have de-rated them over a period of time. This will continue as
these stocks may not bounce back for a while even if the overall markets do, post a correction

 Pockets of opportunities still available in those stocks where growth v/s valuations are still
favourable. However continue to remain cautious of the market levels and valuations and buy
only on dips / correction

Our Strategy

 “Time” in the markets is more important than “Timing” the markets

 Superior long-term sustainable returns are not made by timing the markets in terms of selling at
the peaks. They are a result of purchase prices that are attractive in terms of valuations with
adequate margin of safety

 Even in range bound markets there are enough stocks providing consistent and absolute returns.
Stock picking therefore is the key

 Our strategy going ahead would continue to be:

 Buy on declines/panics

 Use the sharp rallies for part profit booking

 Hold large cash/liquidity during interim periods

 The sectors that we are bullish are and continue to be over weight:

 Banking & Financial Services,

 Gas Transportation & Distribution

 Domestic Consumption oriented sectors including Paints, Branded Garments, Media etc.

Happy Investing

Thank You
Vivek Mavani – Senior Portfolio Manager
vivek.mavani@bricssecurities.com

BRICS SECURITIES LIMITED
1st Floor, Sadhana House,
570, P. B. Marg,
Behind Mahindra Towers,
Worli, Mumbai – 400 018.
Tel: 91-22-6636 0000.

BRICS PMS Performance Update - 31 August 2010

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BRICS PMS Performance Update - 31 August 2010