Our Investment Philosophy has been designed with a few key principles to help our clients generate higher risk-adjusted returns over the long run.
Investors often let their emotions dictate their investment decisions causing them to buy assets based on tips and exit assets abruptly on sentiment. Consistency is the key to investing success and our investment process is designed to take advantage of long term opportunities while preventing temporary market fluctuations from affecting our decisions.
To make money, you need to avoid losing money. The first step we take when evaluating any market opportunity is to consider what the downside can be. It is our belief that if we can reduce the risk of downside, the upside will take care of itself.
In the short term, the markets swing based on investors risk preferences however in the long term they reflect the true fundamentals of an asset. We find that it is very difficult to predict what the price of an asset will be in a day or a week or even in a few quarters. We prefer to take the long-view and buy assets based on strong fundamentals.
It is important to take a portfolio approach to your investments; having all your eggs in one basket is highly risky and is not a prudent strategy. At the same time, we often come across investors with more than 20 different mutual fund schemes or have a portfolio of 75 stocks without really knowing what they own. We believe that a better way to invest is by running a tight portfolio of fundamentally strong assets having a low correlation to each other.
We do not believe in the predictive ability required to time the markets. We invest based on the fundamentals of any given opportunity and sometimes that can lead to our portfolios taking a hit in the short term. But we believe that in the long-run the fundamentals will always catch up and reward the patient investor.
Today we live in a globally connected economy. The average consumer buys items that are produced and sold by companies that are not necessarily listed on the Indian bourses. It therefore makes little sense to be restricted to investing just in the Indian markets. Moreover, international diversification provides prudent risk management by lowering the risks from investing in just one country.
We like the mantra of stress-free investing. We believe the key to this is to invest in firms that have strong corporate governance principles, clean accounting practices, conservative capital allocation decisions along with an eye toward sustainability and the environment. When we select funds, we look for these traits to ensure that our investments are well protected and deliver healthy returns in the long run.