This theme is about befitting from currency depreciation. This comprises of export oriented companies in sectors like IT, Healthcare, Automobiles, and Chemicals & Fertilizers. These companies earn a big part of their revenues in dollars. Every dollar earned through exports means more rupees added to the bottom line as the rupee depreciates.
1 Yr CAGR 32.4%
3 Yr CAGR 9.21%
What is this theme all about?
This theme is about befitting from currency depreciation. This comprises of export oriented companies in sectors like IT, Healthcare, Automobiles, and Chemicals & Fertilizers. These companies earn a big part of their revenues in dollars. Every dollar earned through exports means more rupees added to the bottom line as the rupee depreciates.
What are macro-economic factors driving this trend?
Increasing trade deficit like to stop Rupee from appreciating further.
Increasing crude oil prices will likely further widen the deficit gap.
Strong demand for the US currency from importers lso weighed on rupee movement.
Why is this theme attractive now?
While Rupee may not depreciate much, however it is unlikely to appreciate too, thanks to RBI’s interventions. This bodes well
The pandemic has refocused companies’ efforts on digitization. This has lead to increased IT spends and thus demand for IT services.
Pandemic has also lead to countries trying to move manufacturing from a single destination. This China plus one strategy bodes well for Healthcare and Speciality Chemicals sector.
The underlying growth in these sectors will act as a strong tailwind for investment in these sectors.
What industries/ sectors benefit from this?
The IT sector earns around $145 billion from export of software and services. A falling rupee increases the margins of export-oriented sectors.
The Healthcare sector earns around US $20 billion (Rs 1.4 lakh crore). Exports account for $9 billion or Rs 45000 crore. Similar, to the IT sector, currency movements can have deep impact on the companies’ margins, especially those with unhedged currency exposure.
Speciality Chemical is the next emerging export sector within the country. Chemicals, today is a $36 billion industry, and on its way to become a $100 billion industry in the next six to seven years.
A few export oriented Automobile companies are also likely to be impacted by currency movements.
MoneyWorks4Me method for rating and ranking mutual funds for SIP
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and
ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the
various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Performance Consistency: This is measure based on whether the fund has beaten the benchmark index consistently. For
this we compare the 3-year rolling returns of the fund with the benchmark for a minimum of 5 years and preferable 10
years. The period of rolling is one month and holding period is 3 years. Fund are color-coded Green on Performance when
the fund beats the benchmark more than 90% of the time. It is Orange if it beats 80% to 90% of the time and Red if less
than 80%. Funds with less than 5 year data are color-coded Grey.
Quality of Portfolio Holding: Moneyworks4Me has color-coded stocks as Green, Orange and Red based on whether the
company's performance has generated a ROCE above a threshold level (cost of capital) over 10 years (minimum 6 years) and
generated positive Free Cash Flow. For Banks it checks whether ROE is greater than 15% and sales has grown over previous
year. Stocks that perform consistently on these combined metrics are color-coded Green (min score 14 out of 20), Orange
(between 8 and 14) and Red (less than 8 out of 20).
Fund are color-coded Green provided the portfolio has 70% holding in Green stocks but not more than 20% in Red stocks.
Funds with more than 20% Red stocks in the portfolio are color-coded Red. The rest are Orange funds
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The
ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number
that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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