Investment Strategy

A Structured Approach
to Capital Allocation

We do not rely on a single thesis or a single market view. ArthaSanchay deploys capital across complementary strategies — each governed by its own research framework, risk parameters, and exit discipline — to pursue consistent, risk-adjusted returns across market cycles. Past performance is not indicative of future results.

Core Strategies

Our Investment Strategies

01

Long Only Equity

Our core strategy centres on identifying businesses with strong balance sheets, consistent operating cash flows, and sustainable competitive advantages. We prioritise companies where growth and financial controls go together — focusing on quality businesses with long runways for compounding.

Key Elements

  • Bottom-up research with emphasis on cash flows over reported earnings
  • Concentrated portfolio of high-conviction, thoroughly researched positions
  • Focus on companies with low leverage and long growth runways
  • Disciplined entry and exit based on valuation framework
02

Event-Driven & Special Situations

Corporate events often create temporary mispricings that disciplined analysis can exploit. We evaluate the regulatory, structural, and timing dimensions of each opportunity within the Indian market context, deploying capital only where the risk-reward is clearly asymmetric.

Key Elements

  • Merger arbitrage with defined downside parameters
  • Demergers, spin-offs, and corporate restructurings
  • Regulatory-driven re-ratings and sector shifts
  • Capital structure arbitrage in select situations
03

Quantitative & Factor-Based

Our quantitative framework employs factor models to systematically identify market inefficiencies. These strategies are designed to be uncorrelated with our fundamental book, providing portfolio-level diversification and reducing drawdown risk during periods of market stress.

Key Elements

  • Multi-factor models: quality, momentum, value, and low volatility
  • Statistical arbitrage and relative value pair trades
  • Systematic derivatives strategies with defined risk
  • Continuous model validation and out-of-sample testing
04

Tactical & Opportunistic

A flexible allocation reserved for asymmetric opportunities that fall outside our core strategies. Every tactical position is sized conservatively and subject to the same risk framework as our primary book. This sleeve is deployed selectively, not routinely.

Key Elements

  • Options strategies for asymmetric risk-reward profiles
  • Volatility positioning during market dislocations
  • Structured payoffs with pre-defined downside limits
  • Cross-sector relative value where conviction is high
Process

Investment Lifecycle

Discipline in process eliminates dependence on intuition. Each investment passes through a structured lifecycle — from hypothesis to exit — with accountability at every stage.

01

Screening

Proprietary quantitative screens, industry channel checks, and management interactions to identify candidates.

02

Deep Research

Rigorous analysis of financial statements, cash flow quality, competitive moats, and management credibility.

03

Risk Analysis

Independent assessment of downside scenarios, liquidity constraints, correlation, and portfolio impact.

04

Execution

Conviction-weighted sizing within concentration limits. Entry calibrated for minimal market impact.

05

Monitoring & Exit

Continuous thesis monitoring against catalysts and risk triggers. Disciplined exits — no exceptions.

Risk Management

Capital Preservation
is Non-Negotiable

Risk management is not a separate function — it is embedded in every stage of our investment process. Our framework is designed to limit permanent capital impairment while allowing the portfolio to participate in favourable market environments. No risk system eliminates all losses; ours is built to manage them systematically.

Real-time gross and net exposure monitoring across all strategies
Dynamic hedging through index and single-stock derivatives
Pre-defined stop losses at position and portfolio level
Strict concentration limits per sector and single stock
Liquidity-tiered position sizing to ensure orderly exits
Periodic risk reviews with documented escalation protocols

Key Risk Parameters

Max Gross Exposure100%
Typical Net Exposure100%
Max Single Position10%
Max Sector Allocation25%
Fund Terms

Key Terms & Structure

Fund StructureAIF Category III
Minimum Investment₹1 Crore
Lock-in PeriodNil
Fund TenureOpen-Ended
Hurdle Rate10% p.a.
Performance Fee15% above hurdle rate
High Water MarkYes
Exit LoadUp to 2% for 24 months
Redemption15 days prior notice
BenchmarkS&P BSE 500 TRI
CustodianHDFC Bank
AuditorS V C J & Associates

Management Fee Structure

CategoryContributionManagement Fee (p.a.)Performance Fee
B1₹1–5 Cr1.75%15% (above 10% hurdle)
B2₹5–10 Cr1.50%15% (above 10% hurdle)
B3₹10–25 Cr1.25%15% (above 10% hurdle)
B4₹25 Cr & above1.00%15% (above 10% hurdle)

* Performance fee: 15% of returns above hurdle rate, charged at end of FY or at time of redemption, whichever is earlier, including high water mark provisions. Setup expenses and operating expenses at minimum actual levels as per PPM.

Detailed terms and conditions are disclosed in the Private Placement Memorandum.