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Credence Capital, a fund managed by the students of the Indian Institute of Management, Lucknow (IIM-L), has outperformed Nifty by achieving 175 per cent returns in 16 months.
The Nifty rose 50 per cent in the corresponding period of 2013-15.
Credence Capital had consistently beaten the markets since its inception in 2005. It clocked the highest absolute returns this time.
Credence Capital is an investment-oriented club to further IIM-L community’s knowledge in financial markets, asset markets and personal finance through investment analysis. It provides an opportunity for IIM-L students to enhance what they have learned in classes and at work. The fund was set up with contributions from IIM-L students and every incoming batch pools funds which are managed by Credence Capital fund managers.
The latest series of the fund, 2013-15, launched in September 2013 was themed riding the volatility. The focus was on tapping opportunities due to market imperfections arising from volatility on account of events across the globe, such as oil crash to cyclical turnarounds, currency wars to geo-political tensions, Indian elections to the Greek crisis.
Credence consists of eight members, with investment philosophy ranging from concentrated value investing to exploiting arbitrage opportunities. The strategies vary from batch to batch. Fundamental stock-picking, sector churn, concentrated value positions, derivative strategies and technical analysis contributed to the feat.
The members are selected through an internal process and are mentored and trained by senior club members.
“Our focus was on generating absolute returns like a hedge fund. High returns generally signify high risks. We were diligent to manage our risks without losing out on lucrative trades,” Pratik Mandhana of Credence Capital said.
Abhishek Gupta of Credence Capital said: “We were quick to learn from our mistakes and adapt our approach to build on our strengths.”
It was important to hold nerves and stick to fundamentals.”
