Ikigai Emerging Equity Fund – CAT III AIF

The IKIGAI Emerging Equity Fund CAT III AIF is strategically designed to steadily compound investors’ wealth over the long term. The fund aims to achieve this by constructing a high-quality, low-beta, low-volatility, and growth-oriented portfolio. By prioritizing companies that exhibit stability alongside potential for growth, the fund seeks to provide superior risk-adjusted returns and consistent performance over an extended investment horizon.

IKIGAI Emerging Equity Fund CAT III AIF’s aim is to create a portfolio that can weather market fluctuations while still capturing growth potential.

IKIGAI Emerging Equity Fund CAT III AIF’s investment philosophy is grounded in the Japanese concept of “Ikigai,” representing a ‘reason for being’ or ‘purpose of life,’ which guides their endeavor to create lasting wealth for investors.

Their approach is framed by the idea of “What you love, What you are good at, What the world needs, and What one can be paid for,” and they believe their passion, intent and expertise will help them create long term wealth for investors. They consider reputation and integrity their most valuable assets, and focus on the investment process, stock selection, and the temperament of the management. They focus on 10 core investment principles which includes identifying a theme, using a bottom up approach, and choosing high quality businesses.

IKIGAI Emerging Equity Fund CAT III AIF seeks companies that are focused on long term value creation and avoid market timing, leverage and over-diversification. They employ a three pronged approach based on the Business, Management, and Valuation of the companies that they choose.

They believe that companies with high returns on capital and credible promoters represent a great opportunity, as long as they trade at a discount to their intrinsic value, and they actively attempt to understand the business by interacting with industry experts. They also seek to avoid companies that display poor corporate governance, high debt, or a lack of sustainability. The team’s philosophy is also rooted in an understanding of market cycles and the importance of history in evaluating management teams.

IKIGAI Emerging Equity Fund CAT III AIF utilizes a flexicap investment strategy with a preference for mid and small-cap companies.

This strategy follows a bottom-up stock-picking approach that is guided by the Business, Management, and Valuation (BMV) model. They strive to identify a strong theme, and then use a bottom up approach to find high quality businesses.

The team at IKIGAI Emerging Equity Fund CAT III AIF focuses on identifying quality businesses and on performing an in-depth analysis of both their quantitative aspects (financial ratios) and qualitative aspects (competitive advantages and management). They seek businesses that demonstrate high return on invested capital and are run by honest promoters. The team has a bias towards companies with a long runway for growth, and a focus on cash flow. They also have a strong emphasis on active research and an independent viewpoint. They aim to act like owners with a “buy and hold” approach to investment and minimize risk by avoiding companies with excessive debt, poor governance, or risk of obsolescence.

The team’s investment process includes a clearly defined set of stages from identifying an investment universe, conducting thorough research, generating an investment idea, having discussions with company managements, making a decision on portfolio action, and then ongoing review and reporting. They emphasize a balance between growth and value, and ensure they only pay reasonable valuations for their holdings. They believe that “Growth is the horse and Valuation is the cart,” and they emphasize that that “Outsized returns can be earned over time by investing in great businesses at attractive valuations”.