Move over Algos! The Techie Fund Manager is here.
Indian equity markets have grown at a rapid pace over the past 2-3 years. Domestic flows have gone up several fold over this time frame as the new generation is finally waking up to capital markets as a viable end for their savings. This shift in the asset allocation from banking system, real estate and gold towards financial assets such as stocks, insurance etc has meant that equity markets have seen strong flows.
This liquidity flow coupled with rising stock prices has meant that suddenly fund managers are saddled with lots of money and expensive valuations. This has led to a peculiar problem for modern fund managers in India, how to deploy this large pool of money that is coming in and where to find new ideas from. Further the number of investible companies have been growing steadily, fueled by number of IPOs and growing small-cap/mid-cap companies that are now making the cut.
A few years back even the largest of the investment houses tracked upto only 300 companies, that too with large teams. Now there is a need to track over 500, and that number is going to be 1000 very soon. In such a scenario how does one keep a track of all these companies, what are they trading at, how much upside/downside is there in each of them, what are the pockets of value/overpricing, areas of growth/decline etc.
Technology + Fund Manager = Super investor!!
We believe the investment management industry needs to better adopt technology to be able to keep pace. For how long can you keep up with excel models, link hundreds (or more!) companies data, how many models can one theoretically maintain and run simultaneously. Soon you may want to see valuations across 300/400 companies at a single window. We believe web based models, databases and tools that can extract and derive results for you from all your models is the way out.
With DistrictD’s web based models and tools you can do meaningful analysis by linking all your models using our tools and thereby deriving meaningful investment ideas.
Leverage technology to increase output non linearly
Its not just about the models and tools, it is about how you can leverage technology to increase your own output non linearly. A lot of algo traders essentially do this by running screens on historical/forward looking data and are able to generate a healthy alpha. We believe that this outperformance is contingent on the ability of the algo to process data sets of large number of companies which is humanely not possible to do with the current outdated methods for investment management.
We believe by allowing human inputs and ideas into web models and dynamic databases, even human portfolio managers can match these algos as they would then be able to work on the same large company sets, rather than be limited by the number of ideas that can humanly be tracked by a single person. They become the Techie Fund Manager.
PS – Its been a while since we wrote anything, but we plan to make it a habit to keep this blog updated. We have been working on bringing this concept to life and are happy to say that soon you will see and hear a lot more of us.
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