Dear Investors,
We would like to thank you for your continued support and for entrusting your hard-earned savings to the Accelt Long Term Equity Fund. We are immensely grateful for the trust you have placed in us.
At Accelt, our goal is to help you compound your wealth over the long term—focusing not just on return on capital, but also on return of capital. With unwavering integrity and diligence, we manage your assets with the same care and responsibility as we would our own. We have significant skin in the game, being heavily invested in the same fund ourselves.
Performance
As of 31st March 2025, our returns since inception (5th November,2024) stand at –4.19%, compared to -5.07% for our benchmark, the BSE 500. We remain focused on long-term wealth creation, and therefore, we encourage investors to evaluate performance over a three-to-five-year horizon.
Note: As mandated by SEBI, returns are calculated on a time-weighted rate of return (TWRR) basis for the aggregate portfolio. Individual client returns may vary depending on the timing of their investments. The above figures reflect the performance of the consolidated pool of capital.
Market Scenario & Outlook
For several decades, globalization has been the foundation upon which global trade and commerce have thrived. However, we are now witnessing a shift, with tariff policies increasingly violating the principles of comparative advantage and pushing the world toward deglobalization.
With the announcement of new tariff policies by former President Trump, we anticipate higher inflation—driven by increased costs to consumers—and lower global growth due to demand destruction. While the intent is to bring manufacturing back to the U.S., this is easier said than done. Manufacturing in the U.S. is likely to be prohibitively expensive due to high labour costs and a shortage of skilled workers.
It remains to be seen how this tariff situation evolves and how much of it is strategic posturing or negotiation tactics, versus what will actually be implemented.
India, however, remains relatively insulated. Goods exports to the U.S. account for less than 2% of GDP, and our trade surplus with the U.S. is 1.2% of GDP, limiting direct impact. Moreover, as U.S.-China tensions escalate, the China+1 strategy is gaining traction—and India is a clear beneficiary.
For instance:
- Apple plans to manufacture all iPhones sold in the U.S. in India by end-2026.
- GE has signed an MoU with HAL to produce fighter jet engines domestically.
- Boeing is exploring an aircraft assembly line in India.
Additionally, India is close to finalizing a bilateral trade agreement with the U.S., which could further deepen economic ties.
From a macroeconomic perspective, India is more resilient than ever. India currently has the lowest current account deficit in decades, has exercised strong fiscal discipline, has robust foreign exchange reserves, and is the fastest-growing major economy in the world.
The banking sector has seen a significant improvement in asset quality, corporate balance sheets are strong, and after a brief period of slowdown, green shoots of recovery are visible—evidenced by April’s record-high GST collections.
In conclusion, India has the capacity to absorb global shocks and emerge stronger from this evolving global landscape.
Portfolio Update
At Accelt, we focus on identifying businesses with high growth potential, led by high-quality management teams, and built on capital-efficient business models. Our investment philosophy is guided by our proprietary GMCV framework, which stands for Growth, Management, Capital Efficiency, and Valuation.
We aim to invest in scalable business models with clear competitive advantages. We look for management teams that have demonstrated integrity, fairness, competence, and most importantly, the ambition and drive to scale the business meaningfully. Our focus is on companies that generate high returns on equity and where profits reliably translate into free cash flows.
Our portfolio has exhibited greater volatility compared to the benchmark index. This is primarily due to our higher allocation to small- and mid-cap companies. For us, volatility is not risk. Real risk lies in investing in businesses with flawed models or in companies run by dishonest promoters, where capital may never be recovered. We would much rather embrace a 20% volatile return (aligned with our portfolio earnings growth expectations) than settle for a 10% steady return.
We believe the impact of recent tariff developments will be limited on our portfolio, and we remain nimble in adjusting our views as business fundamentals evolve. Roughly 80% of portfolio company revenue is derived from India, offering us some insulation from global disruptions.
Sectoral Themes:
- Power & Infrastructure: Massive investments in renewables, data centres, and AI infrastructure are driving sustained power demand. We are exposed to power financiers, transmission companies, and equipment manufacturers.
- NBFCs: We are bullish on select NBFCs, especially in affordable housing, where valuations remain attractive (Price/Book of 0.7) and earnings growth is poised to accelerate.
- Capital Markets: Plays like wealth management are positioned for medium-term earnings compounding and are still reasonably valued.
- Capital Goods: Some of our holdings are growing their order books at 25–30% YoY, and valuations have corrected to attractive levels.
Overall, we expect portfolio earnings to grow at ~20% annually on an aggregate basis.
We are closely tracking the evolving global trade environment and sector-specific impacts. Historically, policy shifts and crises have created fresh investment opportunities, and we expect the same in this cycle.
Over the last two decades, we have successfully navigated global crises—from the 2008 Financial Crisis, to the 2013 Taper Tantrum, and the 2020 COVID-19 pandemic. Each presented a unique opportunity for long-term investors with conviction in India’s growth trajectory.
As the late Rakesh Jhunjhunwala wisely said, “Your patience will be tested, but your conviction will be rewarded.”
We remain optimistic about the medium- to long-term outlook, as we believe there is no better structural growth opportunity in the world than India.
Vaibhav Agarwal
Founder & CIO
Accelt Asset Management LLP
SEBI Registration No.-INP000009010