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    Most good companies in India face disruptions which could be external disruptions (regulatory changes, competition intensifying, innovation, economic growth) or internal disruptions (capital misallocation, success planning, lack of systems and processes, change in senior management by way of retirement or resignation). However, there are a handful of companies in India which have the capability to deliver earnings growth consistently in a tight band of 15%-30% each year for more than a decade, regardless of any type of disruption that they face. The Coffee Can Philosophy shows commitment to high quality franchises that consistently sustain their competitive advantages over long periods of time despite being faced by challenges and disruptions at regular intervals.

    Ambit’s Coffee Can PMS builds a portfolio of such companies which deliver long term consistency of earnings growth.

    The following aspects of Ambit’s Coffee Can Philosophy help it outperform the broader markets by at least 500-700bps sustainably each year:

    1. Lower drawdowns during market crash – on average, the percentage fall in a Coffee Can Portfolio is less than half of the broader market during a market-wide crash. This is because Coffee Can Portfolio companies’ valuations are supported by robust fundamentals / earnings.

    2. Low churn in the portfolio – On average no more than 5-10% churn in a year compared to 40-50% churn for most mutual funds. As a result, the Coffee Can Portfolio incurs negligible brokerage costs, capital gains taxes and expense ratios, and thereby benefits the most from the ‘power of compounding’.

    3. Low cost structure – There are no entry loads / exits loads / other hidden charges for any investor. Moreover, there is an option choosing ZERO fixed annual fees where the investor pays only a proportion of profits above a certain hurdle rate. Low watermark is applicable on the hurdle rate.

    4. No need to time entry / exit from this portfolio – Given the ‘evergreen’ nature of the constituent companies, an investor can generate healthy returns from the Coffee Can Philosophy regardless of bull / bear runs in the broader markets, regardless of whether the external economic environment is good or bad, and regardless of the number of years of since when the portfolio has been chosen by the investor.

     
     
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