360 ONE Equity Opportunity Fund – Category III AIF

The investment objective of 360 ONE Equity Opportunity Fund (formerly known as IIFL Equity Opportunity Fund) Category III AIF is to offer investors an opportunity to invest in fundamentally strong businesses experiencing temporary challenges.

The fund employs a bottom-up stock selection approach and adopts a flexible portfolio construction strategy, enabling investments across various market capitalizations.

In addition to conventional equity investments, 360 ONE Equity Opportunity Fund seeks special situations that may lead to value unlocking or re-rating opportunities. The fund also has the flexibility to invest in Pre-IPO opportunities, with allocations typically ranging from 5% to 10%, and up to a maximum of 20% of the portfolio.

The investment philosophy of 360 ONE Equity Opportunity Fund (formerly known as IIFL Equity Opportunity Fund) Category III AIF revolves around capitalizing on business cycles and special situations to construct a diversified portfolio. The fund targets companies with improving fundamentals, increasing Return on Equity (ROE), and a high margin of safety.

360 ONE Equity Opportunity Fund believes that attractive investment opportunities often emerge during periods of heightened market volatility. Recent volatility, stemming from various macroeconomic challenges and geopolitical events, has created stress within specific businesses and sectors, presenting a significant pool of compelling investment prospects.

The fund employs a disciplined and rigorous analytical approach to identify companies experiencing short-term downturns but with a strong margin of safety. These companies are often poised for re-rating, driven by business cycle catalysts or special situation events, offering potential for value appreciation.

The investment strategy of 360 ONE Equity Opportunity Fund (formerly known as IIFL Equity Opportunity Fund) Category III AIF is structured around the SCDV framework, which categorizes investments into Seculars, Cyclicals, Defensives, and Value Traps based on their representation in the BSE 200 index:

– Seculars: BSE 200 Weight – 20%
– Cyclicals: BSE 200 Weight – 16%
– Defensives: BSE 200 Weight – 32%
– Value Traps: BSE 200 Weight – 32%

The portfolio construction process for 360 ONE Equity Opportunity Fund is as follows:

– Investment Universe: The fund considers an investment universe comprising 575 stocks, providing a broad scope for potential investment opportunities.

– Watchlist: From the investment universe, 360 stocks are closely monitored and form the fund’s watchlist, indicating stocks with potential for inclusion in the portfolio.

– Active Coverage: Out of the watchlist, 290 stocks are actively covered by the fund, reflecting deeper analysis and consideration.

– Analyst Recommendations: The fund narrows down its focus further to 80 stocks based on analyst recommendations, representing stocks with strong potential for investment.

– Model Portfolio: Finally, 40 stocks are selected to form the model portfolio, representing the fund’s best investment ideas and reflecting its conviction in these companies.