Why liquidity-driven exhilaration isn't an anchor of our alpha capture

<For accredited investors only>

If you could hypothetically pick inflections, you should steer clear of Minerva India Under-served. Why? - Because we mostly underpace broader indices in large up-move periods (defined here as months when BSE 500 gained >5%), which made less than 20% of all months since our inception nearly 13 years ago. This mostly holds true because we steer clear of popular trades and large pools of liquidity, and these unsurprisingly are typical beneficiaries during liquidity tailwinds. It is critical to note that a significant part of our alpha is really captured during moderate gain/loss and sharp decline months (defined here as months when BSE 500 didn’t gain more than 5%), which accounted for >80% of all months over the last 13 years. These periods handily offset our drags during indiscriminate liquidity induced rallies (refer to the attached exhibit which places BSE 500’s monthly performance since our inception in 5 range buckets, and then compares Minerva India Under-served’s corresponding return in those months).

It is evident that this isn’t the most exciting investment strategy if your ticker tape crystal ball works well. However, if you are as human as we are, and are able to appreciate that you cannot avoid sharp drawdowns and moderate periods (once the liquidity binge ends), you would appreciate how we have created consistent value over most meaningful time periods.