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Fund Management

fund management

Principles of Funds Management

Funds management essentially deals with the maximization of returns and the minimization of risk. The challenge arises since risk and returns move in opposite directions. At Narnolia our funds management approach has been based on 3 core principles:

1

Equities create wealth in the long run but it needs to be blended with other asset classes. This helps capitalize on the best of asset class cycles and also to diversify the risk in the investment portfolio.

2

When it comes to funds management, it is not just skill but discipline and the process of investment and monitoring that matters. Narnolia has always focused on a very rigidly audited process that has built firewalls into the system.

3

We see ourselves less as fund managers and more as wealth optimizers. Wealth optimization is all about maximising returns for a given level of risk or minimizing risk for a given level of target returns.

In the above process, critical aspects of managing money are taken care of. Firstly, the eclectic blend of asset classes ensures that risk is constantly being fine tuned. Secondly, the process acts as your hedge against discretion to the fund manager. Finally, your portfolio is always handled in the context of your risk capacity rather than your risk appetite.

Managing funds with the research edge

At Narnolia, our funds management is predicated on a very strong and unbiased research capacity. The research base not only spans a variety of asset classes but also brings a degree of bottom-up depth to the table with deep industry insights and market intelligence. The research edge is based on 4 key parameters.
1
Data driven approach :

At Narnolia we have deliberately adopted a data driven approach to fund management with our analytics and projections based on very fine tuned methodologies. A greater focus on data and process and less reliance on intuitive approach makes our fund management more scientific and less discretionary.

2
Strong research infrastructure :

A full-fledged research team consisting of the best in class experts like analysts, economists and chartists are scouring through millions of iterations and permutations to bring you the best possible solution at any point of time. It contributes to making the final product a lot more wedded to market conditions.

3
Proprietary analytics engine :

The proprietary analytical engine that Narnolia uses is based on our thousands of man years of research insights and market exposure which helps to better fine tune the solutions with the help of big data and machine learning.

4
Back testing of strategies:

Every strategy or fund management solution provided to clients is back-tested with gigabytes of real data so that the outcome is as close to your unique expectations as possible.

Why our focus on risk-adjusted returns

Risk adjusted returns is the returns that the investor earns net of the risk implicit in the portfolio. This is important for the following reasons.

  • Risk adjusted returns permits the comparison of apples versus apples and provides a common benchmark for evaluating fund manager performance across asset classes.
  • It compels the fund manager to focus equally on risk optimization rather than just return maximization as is the case in general.
  • Helps the investor evaluate the portfolio performance in terms of return per unit of risk which is a more scientific method compared to absolute returns.
  • Puts the onus on the fund manager to compensate the investor for the market risks apart from risks that are specific to the industry or the company
  • Singular focus on fund management by Narnolia Velox ensures that there is no conflict of interest with other related business like advisory, distribution etc. It helps ring fence the fund management activity with very clear Chinese walls.
  • Investors are able to set more realistic target returns based on the risk implicit in the fund, since absolute returns can be misleading.

Narnolia Edge – Client centric approach

At Narnolia, our special edge comes from our approach that is entirely client centric. The client becomes the focal subject of the fund management activity. This ensures inter alia:

  • A fund management strategy that is built around the client’s needs rather than a standard off-the-shelf product
  • A constant process of client engagement which includes client education and client participation in goal setting, risk monitoring and performance evaluation.
  • The fund management strategy and the fund philosophy is more aligned to the risk-return trade-off that the client is specifically look at.
  • A wide array of asset classes that include equities, bonds, liquid assets, commodities and precious metals to give a complete ringside perspective for clients.

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