THE MICKEY AND DONALD SHOW. Strategic events shape history only years after they unfold .

Overview:

For all the readers who are in the age range of 35-45

currently, the sole entertainment avenue when they were

5-10 years old was the DD (Doordarshan) and it does not

need any introduction then to the kiddy serials that were

rage during those times. One such serial I did not miss

was the “Mickey & Donald Show”. That 30 minutes

where I was glued to the telly and forgot what was going

in the world outside since that show was an escape to

fantasyland.

While those days are certainly not coming back and the

world has become increasingly complex, intertwined and

bombarded with (mis)information of all kind that there

appears no time to stand and stare, think, revise or

analyze.

The fantasyland of 1980’s has got replaced by “The

Planet of the Apes”- apologies for hurting ape sentiments

here. The cartoon show has now also been replaced by

the real “Mickey & Donald” show. The Real Donald has

replaced the cartoon and there are more than a few

similarities here. The Disney character was a likeable and

cute duck with a bad temper, a mischievous outlook to

life, a lot of positive attitude and coming out of adversity

(mostly out of his own doing) on the winning side.

Today’s Donald could be the real life equivalent of the

cartoon show we have witnessed. The only problem here

is the fact on the What-if? The cartoon mayhem and

adversity that the characters go through before all’s well

in the end cannot be imagined in real life. While it looks

like that real-life events could actually happen with the

real Donald since the personalities match up so much.

The cartoon character of Mickey Mouse has always been

likeable, intelligent and always triumphant on his enemies

in the end. He does face challenges and to overcome

them he institutes great tricks and intelligent moves to

flummox the rival by being a thorough and calculative

character.

Do both characters’ bear resemblance in the real world

of today?

The current Mickey & Donald show in real lives have got

lasting legacies in times to come. What would happen to

the world in another 10 years, if the show prevails, only

time would tell. But certainly, one thing is certain. Just

like the cartoon characters, the real Mickey & Donald are

likely to vanquish their rivals and create a legacy which

would not be forgotten for the many things it would

create over the next several years. Enjoy the show!

Right Horizons Portfolio Management 12/5/2016 Issue 9, Volume I

THE PORTFOLIO REVIEW

ASSET CLASS REVIEW The month of consolidation and breather.

Equities Markets:

November 2016, ended in stark contrast for emerging markets and developed markets; predominantly the US. The main

indices for the US were up 7% during the month and our Nifty50 index was down by 7%. One single month and one

single domestic event for respective markets have caused enough anxiety for both US & India.

The knee-jerk reaction was quickly consolidating into a sharp cut for Indian indices with short term negative impact on

the economy as a result of de-monetization and the strategic impact on sector US dependent sectors such as IT and

Pharma taking a quick and sharp knock.

There is no doubt that the immediate consequences of the demonetization gambit is certainly going to be negative,

however the debate on the extent of strategic positive impact is yet to be assessed. There are several camps from

‘negative only consequence’ to ‘outright benefit’ to the economy as a result; posing arguments and counters to this move.

Mostly likely that the medium-term consequences would be much clearer close to the 6-12 months’ time window after

the event. We believe that the Q3 earnings for the corporate sector and consumption would certainly take a hit, although

what would be critical to watch out is Q4 rather than Q3 earnings since the announcement was after the festive season

and most of the demand was factored into the consumption story.

Fixed Income markets:

What is loss to Peter is profit to Paul. The fixed income markets stage a short and sharp rally with yields falling fast and

high liquidity making way into the banking system. The amount of liquidity was not surprising given 85% of the legal

tender is worthless and has to be brought to the banks for exchange. There are indications already that a small portion

is never going to come and that is good news for banking since it creates liquidity in permanency which can drive down

the yield and keep them low, which is positive for corporate and consumption, albeit with a lag.

Commodities / Currencies:

The hoarders’ metal – gold had taken brief wings immediately after the demonetization news, however, as the crackdown

began on hoarders and jewelers; the prices began to cool fast. The other commodity complex too is still hot given the

buying has sustained in the international markets. However, what we hear from our channels in the commodity hotspots

is that the rally is likely to fizzle out sooner than later since it lacks fundamental demand/supply backing. If this is the

case, the time to make merry is yet to come out for commodities and yes, so the India consumption story can continue

without any major hitch, for now.

JIM CRAMMER

“Every once in a while, the market does something so stupid it takes

your breath away”.

Read more: The Top 17 Investing Quotes ol Time | Investopedia

http://www.investopedia.com/financial-edge/0511/the-top-17-

investing-quotes-of-all-time.aspx#ixzz4Rwl359WX

What started out as a nightmare and changed quickly to a dream run

appears to be ending as a damp squib. The year 2016 is in all likelihood,

would go down as yet another year which picked up pace during the middle

part but threw the towel only to be ending with little/no returns for the

equity markets.

Also, what has had a field day (nee’ year) was volatility. Volatility was high

throughout the year on all the asset classes and no asset class was spared.

Currencies, commodities (including Gold), fixed income and equities, have

all gyrated throughout the year and performed completely in an

unexpected fashion.

The best part of all the volatile and challenging time is to test out the

resilience of the investment philosophy and logic. And it is no surprise that

our Nifty Plus portfolio performance continued to stay on the top of

league tables; be it direct competition or the marquee MF schemes which

5-Star ratings. We have been consistent in building the best names in the

large and the mid-cap space in this portfolio from day one and the long

period performance now shows. The consistency of the performance

across all conditions truly makes it a large cap – ‘go to’ portfolio for all

seasons. We believe that since the highest volatility period in the past has

been tested on many occasions, the Nifty Plus philosophy remains the best

thing to invest monies if large cap and industry leading names were the

choice class for investments.

All the volatility did dent our Flexicap Portfolio, however it too turned

out to stand and weather the impact of high volatility. Given the level of

volatility we have seen in the month of November 2016, we believe that

time is perfect for investor seeking reasonably higher alpha over the broad

market indices to invest in the strategy since this strategy has the

ingredients to run much ahead of market performance on the upside. This

was also demonstrated during the 2014 calendar period. We believe that

similar market conditions might recur in the near future and Flexicap

appears the best bet to get there.

Table 1: The Nifty Plus Portfolio remains ahead in league tables

FY17

Scheme/Fund Oct Nov FY 16 FY17 Till

Date

ICICI Pru Focused Bluechip Equity Fund 1.22% -3.69% -6.65% 12.97%

HDFC Top 200 1.79% -3.78% -9.80% 15.95%

Birla Sunlife Top 100 1.37% -5.34% -5.16% 11.19%

Franklin India Bluechip 0.66% -3.89% -3.17% 8.29%

Reliance Top 200 0.81% -5.08% -9.20% 10.06%

Nifty 50 Index 0.17% -4.65% -8.86% 6.28%

RH Nifty Plus Scheme 1.95% -4.86% -7.57% 13.96%

There has been immense thought while

we have run the large cap portfolio. We

have kept the temptation to trade a lot in

the portfolio aside and always looked at

how we can generate wider alpha with

minimum risk and churn.

As a result, the benefits are not often

quick when you compare large cap

portfolios of our MF counterparts.

MF large cap schemes are in the

competitive business of showing quick

returns – typically 1 year or shorter time

frames. This game does provide for

visibility of being on top of league tables

for a while, however, it is extremely

difficult to stay there consistently. This is

therefore extremely important if an

investor has to make wealth over longer

time frame.

Our approach is typically that of 3-5-7

years’ wealth building approach. This

could mean sacrificing 1-year

performance for that 3-5-year sustainable

alpha opportunity.

Nifty Plus Portfolio

The fall from grace of the mid-cap portfolio in August 2016 is all but over.

The Super Value portfolio has stabilized and is now positioned not onluy

to recover and losses but also to deliver the returns that should be expected

from such portfolio strategy. There has been no real tweaking to the

portfolio and we believe that current composition is best suited to deliver

solid high double digit returns over the next 18-24 months as the business

thesis and business performance of the invested companies deliver. We

continue to back the names since each business has the potential to

perform in the medium term significantly ahead of the indices and

completion.

The Alliance portfolio

The Alliance Portfolio would see some strategic changes in times to come.

This would be on the basis of the dynamic requirement of the mandate

and our endeavor to make the asset allocation suited to the ever-changing

environment of risk and risk free assets in the medium term. We believe

that making Alliance dynamic through proprietary tools would help us

calibrate our strategic more effectively yet stick and deliver the unique

client mandate of minimum risk and above average return.

This has been our single largest initiative

and thrust area over the past 4 years. We

have uniquely blended the value based

investment method with the mid & small

cap category universe. This has enabled

us to spot and take out opportunities in

the area of fast growing and nimble

smaller companies segment. Yet we have

stuck to core principle of value based

investment management. This has

provided us with immense opportunity

to create wealth and on a sustainable

basis for investors.

SuperValue Portfolio

DISCLAIMER

The analysis is based on the information provided by the clients. Right Horizons has used information that is publicly available and developed in-house; and gathered

from sources believed to be reliable. Right Horizons does not warrant accuracy and/or completeness of the same. Please note that persons subscribing or planning

to subscribe the recommended products should do so after verifying the terms of the products. Financial products and instruments are subject to market risks and

yields could fluctuate depending on various factors affecting capital / debt markets. Please note that the past performance may or may or may not be sustained in

future. Insurance is the subject matter of the solicitation for the Insurance Plans suggested. Right Horizons shall not be responsible for any loss or damage of any

nature, including and not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss or profit in any way arising out of the report and its

recommendation. The recipient alone shall be fully responsible and liable for any decision taken on the basis of this report. This report is based on the proprietary

financial modeling of Right Horizons. No part of this report may be duplicated in any form and/or redistributed without the prior written permission of the CEO

of Right Horizons.

Vinayak Kanvinde

Right Horizons Portfolio Management Pvt. Ltd.

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