Our Approach
The success of investing does not lie in either identifying a good stock, a reputed mutual fund or a mutual fund scheme. Nor does it rest on the past returns or in timing the market. It is the investment strategy and one’s attitude towards investments that really helps achieve goals as planned.
Our Core Philosophy
“SIMPLICITY IS THE ULTIMATE SOPHISTICATION ,” LEONARDO DA VINCI
We believe simplicity or lucidity induces effortlessness. By lucidity we mean an understanding/process, that is both enjoyable and executable on a regular basis. This continual and committed approach leads to success.
Most often people invest in complex products like insurance-cum-investments, multi-assets for low volatility, investment-cum-hedging to beat inflation.
Cutting through the complexities of financial products, our endeavor is to construct a ‘no sweet’ portfolio that is not only easy to understand but even simpler to track, while yielding the desirable risk-adjusted returns; the ultimate aim being to facilitate a practice that is easy and can be continued for a long period.
“SMALL DISCIPLINES REPEATED WITH CONSISTENCY EVERY DAY LEAD TO GREAT ACHIEVEMENTS GAINED SLOWLY OVER TIME,” JOHN C.MAXWELL
History is evidence of all successful investors being habitually perpetual investors. Like any other business, they too work on the principle of “perpetuity” , keeping a continues focus on capital infusion, withdrawal, and reallocation.
However, very often financial investors act quite contrary to the above mentioned; they act like seasonal investors, allocating disproportionate amounts at a high valuation, withdrawing at the panic / low valuation, and re-allocating to wrong assets at a wrong time.
Consistency helps accumulate; Discipline prevents one from going against one’s process. Therefore, our key function is to ingrain this understanding in our investors, time and again, thereby converting them from seasonal to perpetual, so that they invest in a staggered pattern rather than investing at one go.
“PRICE IS WHAT YOU PAY. VALUE IS WHAT YOU GET ,” WARREN BUFFETT
It is a known fact that unless the price is far lower than the value, making a profit is an uncertain affair. Nevertheless, it is the most challenging area for the common investor to value any asset or its component when a myriad parameters are at play; be it asset class cycle, sectoral cycle, interest rate cycle / intrinsic value, growth value, quality value, so on and so forth.
This is also the juncture where the complexity of the subject dissuades most investors from paying heed, which in turn exposes them to the risk of maximizing mistakes by committing capital at a wrong valuation which earns them sub optimal returns.
We understand that valuation is an approximation game and thereby help our investors comprehend the broad valuation matrix to refrain from perpetrating big errors. We focus primarily on capital safety and subsequently on reasonable returns.
“DON'T PUT ALL YOUR EGGS IN ONE BASKET,” WARREN BUFFETT
Every asset class goes through the cycle of boom and bust, so does every individual component /company. No financial tools can certainly predict the crest and through of the market to maximise the returns by timing the same. Moreover, an individual investor usually lacks the expertise needed to understand the nuances of individual businesses.
Having said that, diversification is the tool for the common investor to mitigate the company-specific risk and be exposed to only the market risk, which is unavoidable nonetheless.
Most often, investors get influenced by the market noise and allocate disproportionate capital to those assets or companies which have been recommended by the market experts in order to attain maximum returns, going against the rule of diversification. These are the times when we support our investors to balance/ rebalance their portfolio with the sole objective of not chasing higher returns but optimum/ desirable returns.
“COMPOUND INTEREST IS THE EIGHTH WONDER OF THE WORLD. HE WHO UNDERSTANDS IT, EARNS IT… HE WHO DOESN’T …. PAYS IT ,” ALBERT EINSTEIN
Compounding is an exponential phenomenon in the long run but absolutely invisible in the short run.
The returns, albeit lucrative, require that one be patient and sit through every asset class or individual company as it goes through an expansion mode, often through multi-years . (read more on cycle).
But ever so often, it is observed that investors are more than satisfied to simply have their money doubled or tripled, and they exit or sell out quickly thereby losing the opportunity to have their investments multiply 50 or 100 times or perhaps even more. It’s not uncommon to see people ‘keep the losers and sell the winners’.
It is our endeavour to help investors understand this phenomenon that returns are not linear but exponential with passage of time, thereby to be alert and not miss out on huge potential of long-term investment.
“THERE HAS ALWAYS BEEN, AND THERE ALWAYS WILL BE, AN ECONOMIC CYCLE,” NIGEL LAWSON
Quite akin to nature, business too has its own cycle which pedals along the routes of recession, recovery, expansion and peaking out.
Like valuation, a cycle is also a game of approximation but at the same time it is negatively correlated to valuation. Therefore it is all the more complex for the investor to practice in their business of investment.
Although it is not possible to exactly predict the cycle, we can always adjust our asset allocation towards one extreme, thereby locking our gains and simultaneously re-adjusting at the other extreme to maximize the return and reduce the volatility on the entire portfolio.
Our Market Approach
Get the Multi asset Portfolio
As you are aware, no single asset class is a constant performer, winners rotate. Therefore, our approach is always to construct a multi-asset portfolio with Debt, Equity, Gold and Real Estate (REIT) etc. at the RIGHT valuation with Right weightage to achieve the optimum risk adjusted return. Please remember, most of the investment success is attributed to right asset allocation and a disciplined process-based approach.
Our Client Approach
At the core of our investment process is the understanding of our client’s Unique Needs based on
Different Goals
Risk Profile
Financial Situation
Goals & Aspirations, Risk Profile, Present and Future Cash Flow and Perception
Subject to the above information, we construct the multi-asset portfolio giving appropriate weightage to each asset class based on their valuation. Further, our portfolios are well-diversified based on fund houses, investment style, across the market cap, and some thematic plus sectoral funds, all with a focus on optimum risk-adjusted return. We follow the Top-Down approach for broad asset class allocation & at scheme or product level, the approach adopted is Bottom-Up.
Investing is a continuous process, as all the above dimensions of portfolio construction are dynamic in nature & require periodic rebalancing across asset classes and on various products, and therefore updating the same to our clients with the reason brings transparency and conviction.
Secondly, as investment is a long journey therefore needs nurturing, Hence Hand Holding with our customers during turbulent times is very important. Moreover, since a Client’s needs also change with passing time, we have a client engagement program that conducts one-on-one meetings with our clients periodically, to understand their changing financial situation and apply necessary modifications in the portfolio.
To sum it up, The Client’s financial tranquility is our ultimate aim, we are client-centric and hold the fiduciary responsibility while our approach is solution-based.
