Deepak Shenoy-led Capitalmind, a leading financial services firm known for its innovative investment strategies, has announced the launch of Capitalmind Select India One (CSIO). This is India's first long-bias quantitative multi-factor Alternative Investment Fund (AIF). This new fund aims to provide investors with long-term wealth appreciation by investing in equity and equity-related instruments, utilising a sophisticated, data-driven approach.

Strategy

CSIO is a Category-III Alternative Investment Fund of an open-ended nature. The fund's target corpus will be Rs 500 crore. There is a sponsor commitment of Rs 10 crore. The minimum investment ticket size is Rs 1 crore, as per AIF regulations.

CSIO's investment strategy is rooted in quantitative factors that have been rigorously tested and proven to be persistent, pervasive, robust, implementable, and intuitive. The fund focuses on three key factors that have historically performed well in Indian markets: momentum, low volatility, and quality. By combining these factors, CSIO seeks to achieve consistent returns while mitigating risks associated with single-factor strategies.

The fund's portfolio construction and monitoring process is objective, rules-based, and unbiased. It employs a "sleeving/mixing" approach, allowing for flexibility and exposure to different factors as market conditions evolve. CSIO's investment universe comprises approximately 2,000 stocks, which are filtered down to a final portfolio of around 40 stocks based on their momentum, low volatility, and quality scores. The minimum weight of a stock in the portfolio will be 1%, while the maximum weight will be 10%.

What's the USP?

One of the key differentiators of CSIO is its dynamic sleeving approach, which allows the fund to adapt to changing market cycles. The fund's quant strategy can be refined and advanced over time, ensuring that it remains at the forefront of investment technology. This approach sets CSIO apart from passive smart-beta strategies, which are less flexible in their investment methodologies.

CSIO is designed for sophisticated investors who are seeking long-term wealth appreciation and are comfortable with a higher risk appetite. The fund is not suitable for investors who prefer short-term opportunities or fixed fee structures. 

Capitalmind's track record in quant/factor investing, with its Adaptive Momentum portfolio achieving a 28% CAGR over five years, instills confidence in the fund's potential.

CSIO will charge a management fee and a performance fee, subject to a high watermark. The management fee is 1% per annum for Class A (Direct Plan) and 2% per annum for Class E (Indirect Plan). The performance fee is 10% with a 10% hurdle rate and a high watermark, for both plans.

There are also exit loads for investors who redeem their investments within a certain period. The exit loads are 3% for exits within 1 year, 2% for exits within 2 years, and 1% for exits within 3 years. For exits after 3 years, there is no exit load.

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