ETMarkets PMS Talk | 15–20 stocks, 4Ps and active risk management: Inside Anand Rathi's IMPRESS PMS strategy

A concentrated portfolio of just 15–20 stocks, a disciplined 4Ps stock-selection framework and an active risk-management strategy form the core of Anand Rathi Advisors' IMPRESS PMS approach.

In an interaction with Kshitij Anand of ETMarkets, Mayur Shah, PMS Fund Manager at Anand Rathi Advisors, explains how the strategy combines a long-term fundamental approach with a strong focus on mid- and small-cap companies, while using its proprietary Re-VIEW framework to manage valuations, earnings risks and portfolio exposures. Edited Excerpts -

Q) Thanks for taking the time out. Could you share the current AUM of the PMS strategy, and how has investor interest evolved over the past year?


A) The current asset under management (AUM) stands at Rs 1,366 cr under Discretionary PMS with our oldest and flagship IMPRESS PMS has over 1033 cr.

Number of investors have consistently increased from covid 2022’s low of 258 to 1787 investors currently under discretionary PMS.

Q) The IMPRESS PMS has delivered a 22.26% CAGR over seven years, compared with 13.45% for the BSE 500 TRI. What have been the key drivers behind this outperformance?

A) The focussed concentrated portfolio of 15-20 stocks comprising 75-80% Mid and Small Cap for alpha creation along with strong fundamental investment approach with better exit strategy / Active risk management framework called Re-VIEW to keep check on i) Valuation, ii) Impact of Event, iii) Earnings Check and iv) Weightage check of holdings has help to faster recovery in portfolio compare to corrections has help to drive the outperformance compared to benchmark.

Q) In the short term we have seen some volatility. March, September and October 2026 were particularly challenging months for the strategy. Which asset-allocation calls did not work as expected, and have you made any changes to the process?

A) The volatility seen in the month of March, September and October 2026 are more to do with the disruption in geopolitical issues which are not under direct control also mostly short term in nature. However if it becomes persistent, it can have longer term impact. Post march we were 95% into equity and 5% in Silver.

Which had worked well till August. In September and October with rising crude oil and US Yield curve moving up and FII selling elevated led to underperformance compared to Index due to higher allocation to equity.

We have not changed the process as the earning growth and recovery in corporate earnings were quite decent making us comfortable to keep higher allocation to equity given the valuation it was trading.

Q) IMPRESS follows a multi-cap strategy with a relatively concentrated portfolio of 15–20 stocks. What is the core investment philosophy behind the strategy, and what does it take for a company to make it into the portfolio?

A) The portfolio focusses on fundamental long term investment approach with higher allocation approx. 75% to 80% in Mid-Cap and Small Cap for better alpha creation.

The stock screening is done based on our 4 P analysis. To make it simple we are looking at businesses which are efficiently managing their working capital and cashflow, constant redeployment of earnings and capex buildup for future earnings, reasonable valuation and strong management with sound corporate governance practice. Final call on stocks to be included is taken based on whether macro is favourable for that sector.

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Q) Your stock-selection framework is built around the 4Ps—past analysis, potential analysis, present analysis and pedigree. Can you break down how this framework works in practice?

A) 4Ps is a robust stock screening framework balancing growth and value styles. It filters companies through four key fundamental dimensions: Past Analysis (historical financials, Working capital management, Competitive advantage and Business moat) and Present Analysis (current valuations, margins, and cash flows in comparison to past) Pedigree (management capability, corporate governance, and transparency) alongside Potential (future market size, order books, and sector runways).

This rigorous evaluation process ensures only high-conviction, quality enterprises enter the concentrated investment portfolios.

Q) The portfolio has a significant allocation to small- and mid-cap stocks. In the current market environment, how are you balancing the search for growth with the need to manage valuations and volatility?

A) Definitely current market is divided in two segment 1) cheap valuation and Low growth 2) High Growth but premium valuation. Being in Mid- cap and Small Cap and looking for alpha creation we are more on High growth and premium valuation.

To cater to volatility we have in place active risk management framework named Re-VIEW to have better exit strategy. Exiting a stock in discipline approach V- Valuation Check, I- Impact of Event Check, E – Earnings visibility Changes, W – Weightage check.

Q) For an investor looking at a multi-asset PMS, how should they evaluate the strategy—on short-term returns, downside protection, consistency, or performance across a full market cycle?

A) Multi Asset PMS objective is to reduce the risk by participating in multiple asset classes side by side optimised the return by changing allocation among different asset classes. Short term returns are not comparable as in equity bull market multi asset returns could be lower.

However during correction in equity market the downside is also relatively lower. The Multi-Asset strategy reduces the volatility, focusses on smoothening out wealth creation journey and should be looked upon and evaluated on long term cycle of atleast 3 years.

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Q) Recent portfolio actions include an entry into the Nifty Private Bank ETF and an exit from the Nifty Metal ETF. What changed in your view of these sectors?

A) In Our Multi- Asset PMS we are following dynamic management through ETF. We have played the momentum very well on Metal ETF post pause in the Middle East war during April 2026 commodity cycle looked exhausted and there was an opportunity available to enter beaten down sector large as private bank at reasonable valuation. Hence, it was more of tactical shift based on valuation nothing wrong as far as metal sector goes.

Q) The fund manager's outlook points to improving earnings momentum but also flags risks such as crude prices, global yields, geopolitical tensions and FPI outflows. What are the biggest risks you are watching over the next 6–12 months?

A) Globally we are seeing a paradigm shift giving more thrust to localisation. Although we have seen FTA getting signed with different geography, still tariff wars likely to be ongoing affair. Escalations in geopolitical tension do lead to disruption in global trade and rising crude prices.

Although we have seen a shift in global energy infrastructure happening, its still a long way. Crude prices remaining elevated above 100$ has its cascading effect of rise in Inflation and Interest rates leading to slow down of economic activity for medium term till the time system absorbs the same. Globally too if the Yield curve stays higher the equity risk premium reduces leading to contraction in valuation.

Q) Pharmaceuticals, financials, FMCG and chemicals are among the key sector exposures. What is making you positive on these sector and what is the common investment theme tying these holdings together?

A) Indian pharma’s strength lies in its dominant global market share in complex generics, biosimilars, and high-margin contract research (CDMO). Its growth visibility is highly secured by structural domestic demand for chronic therapies and the accelerating global shift to diversify supply chains away from China.

Similarly the Indian chemical industry's strength lies in its advanced R&D capabilities, low-cost engineering talent, and a dominant global position in specialized chemical synthesis apart from China +1 factor.

The Indian financial industry’s is among worlds best in term of clean bank balance sheets, historically low non-performing assets, and a world-class digital public infrastructure.

The structural shift of domestic household wealth away from physical assets like gold and real estate into formal financial products creates a highly resilient, domestic-funded credit ecosystem poised to compound earnings at a steady multiple of India's expanding nominal GDP. The sector moves with economic cycle and we believe the economic cycle is bottomed out and started northward journey.

Within FMCG we are focusing on companies capitalizing on strong pricing power and an urban "premiumization" wave, where consumers are rapidly upgrading to higher-margin, specialized wellness and personal care brands. This transition from essential commodities to discretionary lifestyle products ensures resilient corporate earnings and highly visible, premium-led growth across the domestic consumption landscape.

The exposure to these sectors are still under control as we do not invest more than 20% in single sector and would like to have well diversified portfolio spread across sector with clear focus on sectors benefiting from India’s Industrial and Manufacturing growth, shift in Consumer Savings and consumer discretionary spending.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)