Revisiting your investment strategy: Strategic & Tactical Changes

The world, as they say, has changed. What we had taken for granted, no longer seems to be true. And now, more than ever, the saying “Past Performance is no indicator of future returns”, holds especially true.

Rather than focusing on what we all know, we would like to take a fresh look at things around us and focus on how we should Adapt to the new “new”.

We are looking at some strategic ideas considering changes which are expected to be permanent in nature, while deriving tactical ideas based on mean reversion (what comes down must go up)

We believe the basis of recommending any investment product must be on a bedrock of deep understanding of client’s need, their risk appetite, as well as the on-going market opportunities rather than “buying now as it is cheap”.

On Current Market Situation

Most governments & central banks have stepped up their efforts to calm financial markets and support their economies. We have seen similar liquidity injection during times of past crisis to support financial markets.

While the priority for the government is to provide immediate relief, the long term extended measures shall focus on reviving the broader economy.

Source : Fintso Research

These measures shall include expenditure on various sectors such as healthcare, insurance, food & beverages, automobiles, manufacturing, civil work & tourism. The government needs to focus on creating jobs especially for the displaced blue-collar workers.

In order to stimulate consumption in the economy, we are heading towards at a prolonged period of low interest rates environment.

As can be seen from the above graphs, markets react to liquidity and fear, which is how markets do behave in the short term. However, at least in the medium terms, market will look for earnings growth. This, in turn, makes it imperative for us to understand different sectors as some of them shall emerge as stronger as or less shattered than the others.

The picture below shows the impact on different sectors in the medium term

Source: Dcode EFC Analysis

Strategic Changes

As and when the world shall overcome this crisis, recovery shall happen only when large numbers of people and businesses become confident that the virus is no longer a big problem. Through this time, there would be certain fundamental changes in our habits & our outlook. Habits once changed, shall result in paradigm shifts in demand.

The effect of Work from Home (WFH) and increased importance of going Digital, is something that shall have a long-lasting effect.

For technological advancements, countries across the world shall embrace a regulatory framework to empower innovators. Some of these regulatory changes we can envision:

· Supply chain disruption could lead to both

   a) local manufacturing
   b) country distribution away from China

· Given how essential delivery depends on the last mile – delivery boys, would there be changes by way of drone deliveries?

· Would driver-less cars be the thrust, along with Electric Vehicles?

As we take this time out during the on-going lockdown, advisors need to re-think their business strategies to stay relevant. With the emergence of premium Mutual fund software for IFAs and the best financial adviser back office systems, embracing the way of technology and the digital seems to be the right way out for them.

In the next part of our advisory, we would be sharing our analysis and recommendations on actual funds based on the current market situation and views – that will be forward looking.

In equity, for tactical holdings we would focus on a set of funds that have high upside-capture while for strategic holdings we would consider funds with low down-side capture. For fixed income (debt), we would be sharing our recommendations, based on both credit analysis as well as expectations on interest rates, given the expected liquidity infusion.

Do write to us with your feedback at:

About Us

We are a fintech platform that provides solutions to Financial entrepreneurs to address their needs, of research, advisory, product access and client engagement. We empower entrepreneurs, to do more for their clients – while retaining their identity.

The team at Fintso has deep domain expertise on the Indian Investment space, Wealth management and cutting edge Technology.

Fintso has formed an internal Investment Committee : which has a focus on two things

· Research and Advise given out

· On-boarding new unique product / services on the platform.

The committee consist of Rajan Pathak (co-founder and MD), George Mitra (co-founder and CEO) and Kumarpal Jain (AVP and Head – 3rd Party products).

Meet the Investment Team :

Rajan Pathak

Co-Founder and MD

Rajan was a member of team who launched India’s 1st Multi-Manager and Fund of Funds AMC concept in India. He had also launched India’s 1st Multi Asset, Multi Product “WRAP” Accounts with online action capabilities. These WRAP accounts were Ranked with a 4 Star by Value Research for process and performance. With more than 2 decades of experience in financial markets, Rajan’s accomplishments include establishing successful B2B businesses supporting the financial entrepreneurs. His vast experience & deep understanding of advisor’s need help us build a strong framework of actionable insights.

George Mitra

Co-Founder & CEO

George was part of the Investment Committee and has been instrumental in designing the algorithms for products and advisory in his previous firm. George had helped design the Financial planning software and created the models for Asset Allocation using Efficient frontiers way back in ’00 while in Deutsche Bank. With over 25 years working with Ultra-HNI clients, George has a deep understanding on designing solutions for the end clients.

Kumarpal Jain

Head – 3rd Party products

Over the past 8-years in financial markets, Kumar has developed an intrinsic understanding on different asset classes and built an excellent product knowledge. This in-depth knowledge on markets and products would help us bring best of the advisory to investors to facilitate informed investment decisions. He was a core member of the team that helped create the processes that were used for Fund selection in both his previous organizations.

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