Dear Investor, As I write this memo, India is in the grips of a ferocious COVID 19 second wave. My heart goes out to all the families who have lost someone to this potent virus and many more who are still fighting for their lives. It has been heartwarming to see so many of us going all out to help fellow citizens in whatever way we can. Experience of such altruistic acts is sublime. Hope we keep this spirit beyond COVID 19 and continue lifting each other up.
On the investment front, the markets continue to hit all-time highs even against the above backdrop. I have in my previous memo (dated 9th Feb 2021) written extensively about such disconnect and one should not be surprised. I am glad to see our portfolios continue to outperform the markets post Mar'20 even with us having minimal exposure to cyclical/commodity sectors. During such periods it is very difficult to avoid greed of taking short term bets, but we have stuck with what we understand best. Of course, one must take such decisions consciously with an open mind to opportunities. In this memo I have presented an analysis on the performance of cyclical versus structural sectors over the past 20 years and why we have decided to stay away. In addition, I have also shared my views on where we are in terms of the market risks-rewards. First let me briefly cover how FY2021 (Apr'20-Mar'21) was for us...
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