Anirudh Garg on how quant-based PMS works & looking for new market leaders
Anirudh Garg, Managing Partner, INVasset, says “markets have a tendency to remain expensive for a very long period of time. We will see it from 2018 to 2020. You select all those Warren Buffet companies and once in six-seven-eight years when you get a chance to find those exuberant markets where there are bubble-like situations, go in for pension fund investing. The preservation of alpha is as equally important as the generation of alpha.”
You have almost 40 stocks in your portfolio. Before we dive into the calls which you are taking, I want to understand what is your portfolio selection philosophy? How do you approach markets that you have constructed this portfolio?
We are a quant-based PMS.
So, quant is when you take decisions by an algorithm. What is an algorithm? Algorithm is something where the human idea is taught to the computer via code. Why do we do this? We do this because we want to overcome the human bias that is out there.
So, all the selections that you see, all the stocks that you see, are totally selected by an algorithm and researched by our 20-member plus team.
But at the same time, however much I respect the work of algo, which is gaining traction in our markets and is getting popular here, the mind and the scheme, the theme and the formula on which that algo is based is a portfolio manager's job or the team which puts it together. What are the basics of the formula which you put in place in your algo?
If we have to understand the algo, I will just tell you the gist. There are four popular investing styles out there.
