VOLVIN BALANCED 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.

VOLVIN PRESERVER FUND – RABBIT RETURNS: PROPOSED

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.

Investment Objective

The Volvin Balanced Fund – Rabbit Returns, in the long run intends to create wealth for investors. The objective is to create returns similar to equity returns, but with a much lower risk than the balanced funds.

• to invest in Equity,
• use derivatives for the covered call option writing strategy,
• arbitrage opportunities,
• covered call 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:

• Create long-term wealth through Equity investments with lower risk / Beta.
• Generate Returns & alpha in the Derivative Segment on a monthly basis through a Covered Call option writing strategy on the underlying portfolio at a much lower risk than even Equity Mutual Funds.
• Income / Capital distribution on a Monthly basis or Quarterly Basis.

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

Key Features :

• Conservative Equity Product with lower Beta to ensure higher stability.
• 30% - 40% lower risk in terms of Beta compared to Equity Mutual Funds.
• Will try to deliver capital appreciation as well as Monthly / Quarterly Payouts.
• The investment horizon should be 3 years or more.
• The product should do well even in a stagnant market or where the broader indices remain in -10% to +10% range.
• The objective of the fund is to generate total Gross returns of 12-18% p.a..
• Balanced - Best of both worlds – Equity & Debt.

Expected Returns :

• Aims at long-term wealth creation of total gross 12-18% returns p.a.
• Out of this, the aims is to pay Monthly/Quarterly Dividend or Capital payout of gross 5-8% p.a.

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 220+ 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

• “Have your cake and eat it too”.
• India’s First Fund ambitiously targeting to generate capital appreciation of Equity in addition to returns from Debt at the same time.
• 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%.
• High Sharpe ratio.
• Low Std Deviation.
• Low Beta.

Liquidity

• Monthly Entry-Exit.
• Exit load - 2% up to 2 months, 1% up to 6 months.
• Lock-in - There is no lock-in period.

Benchmark: Nifty 50 Hybrid Composite Debt 50:50 Index Key Partners

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

VOLVIN GROWTH FUND - MOMENTUM LEOPARD

Philosophy of Fund

The unique philosophy for the fund can benefit the select few market experts or veterans who understand timing the stock markets. The philosophy suggests the use of leverage to benefit from the upside in the equity markets. Only those who understand how to time the market can benefit immensely from the same. The fund combines fundamentals of long-term investing with the power of leverage to provide superior than market returns.

The philosophy has 2 sides to it

• - Primary Portfolio: long only equity similar to portfolios of MF & PMS.
• - Secondary Portfolio: Conservative Covered Call Portfolio created by using leverage in addition to the primary portfolio.

Overall, the strategy is high in risk category but can generate high potential returns due to additional leverage.

Investment Objective

The objective of the fund is to invest in listed Indian securities similar to mutual funds & PMS long only portfolio.
The investment objective of the fund is to generate high returns for the select few investors who can time the market and understand that leverage can generate higher returns on the portfolio, albeit with higher risk.
There is no guarantee the investment objectives of the Fund will be achieved.

Investment Strategy

As AIF Cat 3 SEBI provisions allow leverage of up to 2.00, the fund would use the margin available from the long only side equity to create a covered call portfolio using derivatives over and above the primary portfolio.

• Step 1 : Stock Selection using fundamental research and create diversified portfolio of listed securities. The strategy involves creating two portfolios:
  • - Primary Portfolio: long only equity similar to portfolios of MF & PMS.
  • - Secondary Portfolio: Conservative Covered Call Portfolio created by using leverage in addition to the primary portfolio.
• Step 2 : Utilise the margin available from the portfolio to create another Covered Call portfolio over and above the long only portfolio.
• Step 3 : The return generated from Covered Call option writing would enhance the overall portfolio returns.
• Step 4 : Rebalancing the primary long only portfolio can be a lower churn portfolio and the secondary CC portfolio will require monthly rebalancing.

Expected Returns:

If equities deliver 12-15% p.a. returns in the long run & 20-30% during a bull phase, this strategy if rightly timed can generate an alpha of 8-15% p.a.

Key Features:

• 1. Higher risk equity product with leverage.
• 2. Higher Beta product with potential for greater returns.
• 3. Combines long only strategy with Covered Call option writing Strategy.