When past performance is there, then under the garb of diversification people run to buy something which has performed very well. Why did international funds get maximum money in the last one and a half years? That was because of their impressive past performance. Then, you have to find out how much and why specifically for you. The standard answer is that you will get diversification. If you’re looking for global exposure, first, you have to ask why. So, these are the odds you need to know before you decide to take the index fund route. Every year, 42% of large cap funds outperform the Nifty by 2.28%. on the Nifty, why would you go for an index fund? And this has been our track record. If you have the capability to use statistical tools to identify futuristic performance and if you can generate alpha of 2-3% p.a. So, zero alpha is a cost reduction strategy, we like to pursue value rather than cost.
Giving an undertaking that I want zero alpha is like going to war and giving away all your ammunition and saying I’m at peace. Choosing MFs which can outperform the Nifty from a futuristic perspective is our USP.
We don’t do PMS (portfolio management services) for different reasons such as unfavourable profit share especially in bull markets, tax inefficiency and higher standard deviation. We don’t do direct equity because the standard deviations are as high as 30-35%. We recommend only mutual funds (MFs) for long-only positions to our clients because the standard deviations are low enough. What do you recommend under equity? What about international equity exposure? Our assets under management (and not under advice) are Rs. In this industry, assets under management is a very diluted nomenclature because there is no audited number. By balance sheet, we mean anything you don’t use (such as the house you live in) and something meant only for growth in value. We focus on clients with a balance sheet of Rs.
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