VOLVIN GROWTH FUND – ACTIVE RABBIT

Investment Objective
The investment objective of the Fund is to invest in listed Indian securities, primarily those featuring in the F&O segment of the NSE, and use a Covered Call writing strategy to generate long-term capital appreciation. This will be done by capitalizing on the upside in Equity as well as through Covered Call Option writing in the Derivatives segment.

To adopt this two-pronged strategy to invest in listed stocks for long-term growth and maintain a derivatives segment to create an alpha, thereby generating returns greater than the market.

There is no assurance or guarantee that the Investment Objective of the Fund will be realized.
Expected Returns: In the long run the fund can deliver gross returns of 12-20%. In a market that is range-bound and stagnant, this strategy yields the best results.

Volvin Growth Fund is India's 1st fund focused on wealth creation through covered call writing
Philosophy: “Winning through volatility”, beautifully sums up the entire Volvin Philosophy.
Like a surfer who is adept at riding the waves and uses them to propel him forward, the Volvin philosophy can be described as “winning through volatility”. Both “Winning” and “Volatility” are equally important & integral to the whole philosophy.

Indian options trading market boasts of having the highest volumes in the world. The speculators use options in a big way to speculate in the market. The option buyers pay a premium of approximately 2.5-5.0% per month for these stock options. Volvin Philosophy benefits from selling these call options on the underlying portfolio and collecting the option premiums or “monthly winnings” which we have now coined as Equity Rentals. On an annualised basis this 2.5-5.0% translates into potential returns of 30-60%. The fund aims to capture the maximum quantum of these huge premiums paid by the speculators. The actual returns generated has been in the range of 1.25% to 1.5% in the past.

The philosophy has both passive and active sides to it.
In the Equity segment, fundamental research is the paramount factor for stock selection and the fund is very passive with low portfolio turnover. The stocks are carefully picked keeping in mind the valuation parameters PE, Price to Book, growth prospects & dividend yield.

The Derivatives segment is used to write Covered Call options on the underlying portfolio, thereby generating positive monthly returns or “winnings”, irrespective of the market movement. The fund tries to capitalize on the volatility in the market by using short-term volatility to add position and also earn higher income from Covered Calls due to an increase in VIX or option premiums.

The Derivatives segment is hence used to create monthly winnings by selling Call options, for hedging the portfolio, and also for profit booking of investments.
During the calendar years 2022 & 2023, the average variation in high & low of these F&O stocks was 59% & 83% respectively. This movement or so-called volatility is much higher than the 12-15% annualized returns expected from Indian Equity. Thus the case for monitoring technical charts, stock movement, volatility, and trying to benefit from these.

Investment Strategy
Step 1- Stock selection:
The domain for stock selection is only the 184 stocks available in the NSE Futures & Options segment. Fundamental analysis is used to identify stocks that can be part of the portfolio. Primary parameters used are PE ratios, Growth of the company & sector, Price to Book, dividend & growth consistency, management, the future outlook for the sector.

Step 2 - Portfolio Creation:
Technical charting is used to identify the right level to invest in the stock. Market Structure and technical indicators such as Moving Averages, RSI & MACD are used to identify the entry point. When the identified stock approaches the entry, the entry is made in a staggered manner of the total planned investment.

Step 3- Writing Call options:
Monthly Call options on the stocks are sold/ written to generate returns in the derivatives segment. These options are primarily sold on the underlying portfolio in the Equity segment. Whether a call option is sold at the money, deep in the money, or out of money is dependent on the technical view of the particular scrip. Staggered selling of call options is also used when the technical view is not clear.

Step 4 - Profit Booking:
When the portfolio stock prices reaches its target the call is covered and the profit is booked in the Derivatives segment by selling the future, still maintaining the cash position in the Equity segment (EQ).

Step 5 - Rebalancing:
As the portfolio faces continuous profit booking whenever the market or the stock price moves up, the long position keeps on getting reduced. The fund also uses the Derivatives segment to buy Futures of the stock identified and writes call options on that. Profits are booked by exiting the total position in this case by covering the call and selling (squaring off) the future. Monthly rebalancing is done to maintain a net long position of 50-100%.

Key Features or USPs for the Fund

• Conservative Equity Product
• 30% lower than risk than Equity Mutual Funds
• Can deliver a gross 12-18% even in a stagnant market
• Top performing fund in the country with Sharpe Ratio of 2+
• It is an All-weather fund - we create wealth in most scenarios.
• Covered call option writing is the only strategy that creates alpha even in stagnant or uncertain markets.
• Monthly income in the Derivatives segment by call option writing, ranges from 0.90% to 2.50% a month (as per past data Oct 22 to Sep 24).
• A diversified portfolio of 40-60 stocks at most times, ensures higher stability and 40% lower risk than market and most Equity Mutual funds.
• Beta of the fund was 0.55 for the last year (2023-24)
• An average long position of around 70% ensures 30% lower risk.
• The fund tracks the Greed & Fear indices to track the emotions of the market players
• The Fund manager is more focused on Risk measures than market returns
• Uses derivatives for hedging, especially during high volatility in an uncertain market

There is no assurance or guarantee that the Investment Objective of the Fund will be realized.

Benchmark: Nifty 200
Liquidity Profile

• Subscription Frequency - Monthly(Application to be received by 20th of the month)
• Redemption Frequency- Monthly (Redemption to be received by 20th of the month)
• Lock in- Nil
• Exit Load - 2% if redemption < 2 months, 1% if redemption < 6 months

Key Partners

• Custodian- HDFC Bank
• Fund Accountant- HDFC Bank
• RTA - CAMS
• Trustee- Vistra ITCL (India) Limited
• Tax Consultant- BD Bansal Co.

VOLVIN BALANCED FUND – RABBIT RETURNS: PROPOSED

Investment Objective
The Volvin Balanced Fund – Rabbit Returns, in the long run intends to create wealth for investors. The objective is to invest in Equity, use derivatives for the covered call option writing strategy, arbitrage opportunities, derivative strategies to provide capital appreciation in the long run along with distribution of capital.

The fund also intends to distribute returns on a monthly /quarterly basis through capital return/ distribution.

The fund will adopt a 3-pronged strategy:

There is no assurance or guarantee that the investment objective of the Fund will be realized.

Investment Philosophy

The fund philosophy stems from the need of individual & corporate investors who wish to create wealth on their investments at a lower risk. Equity is the best product for wealth creation in the long run. This fund will invest in Equity and use the globally popular strategy of Covered Call writing to generate returns from Equity with lower risk.
Both Equity as well as Derivatives are equally important to the whole strategy. A diversified Equity portfolio created based on fundamental research provide stability to the portfolio, and the Derivatives segment ensures Monthly Returns by use of Covered Call Option selling on the underlying.

Both “Winning” and “Volatility” are equally important & integral to the whole philosophy, where volatility helps us earn higher option premiums and the derivative segment ensures monthly “winnings” or “rentals” on our underlying portfolio.

Investment Strategy

In the Equity segment, the Fund invests similar to a diversified mutual fund in stocks of 40-60 listed entities featuring in the 180+ list available in the NSE Futures & Options Segment. Fundamental research is used to create this portfolio. This is generally passive investing as the portfolio turnover targeted is below 30% for a year.
Fundamental investing is the paramount factor for stock selection. The stocks are carefully picked keeping in mind the valuation parameters of PE, Price to book, dividend yield, and growth prospects for the next 3-5 years. We are not comfortable in adding high PE stocks either from FMCG or the new age, e-commerce, and fintech sectors.
In the derivatives segment, the fund focuses on writing/selling as many covered call options on the stocks in the underlying portfolio. This helps the strategy generate returns each month on the underlying portfolio irrespective of the market movement.

USP – India’s First

India’s First Fund ambitiously targeting to generate capital appreciation of Equity in addition to returns from Debt at the same time. It will use Covered Call strategy to generate gross returns in a range of 15-30% over the long term. The Fund will have an ambitious target of making the above phrase true, thereby attempting to generate a long-term capital appreciation of around 12%, and also distribute income or capital to the extent of regular FD returns of around 7%.

Key Features Expected Returns

VOLVIN PRESERVER FUND – CONSISTENT TORTOISE: PROPOSED

Investment Objective

Most of the products like Fixed Deposits, Government Bonds, and AAA Corporate Bonds hardly preserve wealth as the income tax on these products is around 30%, thereby actually destroying wealth on a post-tax basis. At Volvin Limited, we understand the difference in wealth creation and wealth preservation. In a real sense, wealth preservation would mean generating returns above 7% on a post-tax and post-expenses basis.

The investment objective for the Volvin Preserver Fund – Consistent Tortoise is to preserve the wealth of the investor, thereby trying to create gross returns in excess of 10% p.a. to cover for the fund expenses and taxation.

This will require the fund to generate an alpha of 3-5% a year over and above the inflation or FD rate of 7% with minimal risk. The aim is capital protection as well as alpha generation to cover for fund expenses and taxation.

Wealth preservation for us means returns greater than inflation rate on a post-tax basis. The objective of the fund is to generate these returns with lowest possible risk.

The Fund will invest in listed Indian securities, other permitted securities, and investments that a Category III AIF is permitted to invest. It will adopt a two-pronged strategy to invest in listed stocks for arbitrage returns and maintain a derivatives segment to create alpha, thereby generating returns greater than the benchmark.

Philosophy

The fund philosophy stems from the need of individual & corporate investors who wish to invest in low-risk products, at the cost of having the lowest returns. This category is the lowest rung in the ladder in terms of returns, but is also the lowest in terms of risk, thereby falling in the least-risk category. The primary objective of the fund is safety of capital and preservation.

The lowest risk or most safe investment options available are Fixed Deposits, Govt. Bonds or high-quality Corporate bonds or Arbitrage Funds. Those investing in Fixed Deposits for the long term, lose out on heavy exit loads charged in case of premature withdrawal. Even most arbitrage funds have an exit load for redemption before 30 days. To avoid exit loads or premature withdrawal charges, the only option left would be to park money in short-term Deposits, but the returns on these are very low.

Volvin Preserver Fund – Consistent Tortoise aims to give more flexibility to the investor to withdraw at weekly intervals without having to sacrifice on these already minimal returns in the total spectrum of investing.

Investment Strategy

Volvin Preserver Fund – Consistent Tortoise aims to generate net returns closer to inflation, the 5-year G Sec or Fixed Deposit returns. The fund targets 10-11% gross returns per annum. As the primary objective of the fund is to create returns with the lowest possible risk, the primary strategy will be:

• To invest in the Equity in the Cash segment and short in the Futures segment thereby taking advantage of Arbitrage between both prices. This is possible for around 180 listed stocks featuring in the F&O category of NSE.
• Use the margin available to deploy into conservative low-risk options strategies in the F&O segment to generate alpha
• Use any special situations like mergers or acquisitions to create an arbitrage that may give returns greater than the risk-free rate

The Fund Manager’s job will be to generate returns higher than inflation with low incremental risk. Interest Rate risk in this fund will be minimal due to the absence of investment in medium or long duration Govt or Corporate Bonds..

USP – India’s First: India’s 1st Fund in the wealth preserver or arbitrage category with weekly entry exit option

Key Features

• Low-risk Product similar to arbitrage looking to exploit low-risk strategies in Options & Derivatives
• Normally low-risk and low-income products like FDs and arbitrage funds attract either low liquidity, a lock-in period, or an exit load.
• Volvin Preserver Fund – Consistent Tortoise will be India’s First Cat3 investor-friendly fund offering greater flexibility in the form of:
• (a) Weekly Entry & Exit
• (b) No Exit Load
• The fund will try to generate higher returns on post tax basis.
• This fund will compete with Fixed Deposits, Liquid Funds, and Arbitrage funds due to no exit load whether redemption is sought in 1 week, 4 weeks, 3 months, 6 months, or even a year. Also, as the fund endeavors to create an alpha of 3-5% a year, the fund will try to generate returns of more than 6-7% p.a. on a post-tax basis.
• Greater flexibility to the investor in terms of weekly entry and exit options.

Expected Returns

• The fund will endeavour to create gross return in the range of 7-11% p.a.
• On a post-tax and expenses basis, the fund would target returns of 6-8% p.a.

There is no assurance or guarantee that the Investment Objective of the Fund will be realized.