Limited exposure to Wall Street megacaps insulated us from drawdown: Arindam Mandal of Marcellus
Global Compounders fund has outperformed the S&P 500 by a wide margin by keeping limited exposure to megacaps.
«This positioning has insulated us from the recent drawdown and volatility. The megacaps, including not only the big tech names but also companies like Eli Lilly and Costco, have been bid up to extremely high valuations due to their certainty around growth and earnings delivery in near term,» says Arindam Mandal, Portfolio Manager at Marcellus Investment Managers.
Edited excerpts from a chat:
How has been the performance of your Global Compounders fund amid all the turmoil being seen globally?
The past month has been volatile for global equities. The turbulence began with a momentum reversal in U.S. markets in mid-July, where megacap stocks saw a pullback while laggards gained, leading the Russell 2000 (Small Cap) to outperform the S&P 500 by approximately 12% over 12 trading days—a rare event in the past 25 years. Following this, weaker-than-expected U.S. job data further dampened the broad market. Weak demand signals, particularly from China, led to lower oil prices despite rising tensions in the Middle East. The Federal Reserve’s hint at a potential rate cut in September provided some relief, but the Bank of Japan’s unexpected rate hike disrupted the «yen carry trade.»
Despite the market choppiness since early July, the Global Compounders portfolio has held up relatively well, remaining flat compared to the S&P 500's decline of over 4% and the Nasdaq's drop of more than 8%. It’s reassuring to see
