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Role of a Fund Manager

I recently attended an event which hosted the who’s who of the investment community. The event was vibrant with several interesting presentations, strategies and big talk. The best was reserved towards the end. The biggest/popular/visionary fund managers in the country took to the stage for a panel discussion in a jam packed room. As expected it was an entertaining and gyan filled dialogue which lasted for an hour. Most of which was advice to the lay investor on how to go about investing, avoiding common mistakes, greatness of the Indian economy, the triviality of a slowdown, the glorified art of stock picking….and so on. Generally the kind of talk given by a 6 footer dad to his 4 year old son about how to grow tall like him…!

Later the Q&A round was opened. Everything went well till the last question was asked …a visibly tired looking gentleman stuttered a very simple question…“I have been here all day listening to all of you patiently…and I am wondering…with all the best resources and strategies at your disposal why Sir, is my money invested with you in loss?”… the room that was roaring with applause suddenly fell silent.

The last two years have been excruciating for fund managers. Majority of the active managers have underperformed the broad market index and many of them loss making as well. This has made it difficult to explain to investors. The math just doesn’t work and they are left only with some nice story-telling.

The common myths about fund managers are that they are great visionaries and have information that the layman cannot access. Their instincts are better than others and they always choose the right stocks to make profits. But in reality, Fund managers are equally biased in their approach and fall prey to the market mayhem. Many of them carry a low score on timing the tops and bottoms. After all they are mere mortals!

That brings us to some fundamental questions … What are the capabilities over which a fund manager needs to be evaluated? What kind of value addition can they bring to your hard earned money? And finally why can’t you manage your own funds if you have the ability to earn it?

Clearly there are certain characteristics of fund managers that are over rated and there are others that are less appreciated. The table below will help compare and prioritize some of them.

When you invest through a fund manager you expect the following- a dedicated personnel who would take safe custody of your money and grow it as per the mandate. The mandate should clearly correlate with your risk profile and expected return. This is the area where most of the oversight takes place and it is generally assumed that all investors belong to the same herd and have the same characteristics. Another major miscommunication occurs in how the mandate will be achieved. Ambiguous strategies based on assumptions and storytelling will fail at some point. No fund manager is 100% sure that their strategy will hit bulls eye. However any strategy proposed should be backed by a rudimentary but robust process that should lead to the right outcome atleast in terms of the trajectory. It should be simple, scalable and workable in all seasons. Focus should be more on avoidance of ruin rather than maximization of return which means there must be more weightage provided to downside protection compared to upside potential. The real value of a fund manager rests here.

Finally, if you have made so much money why can’t you manage it yourself. This is because you may not have the temperament to do so. Your skills in generating income may come from the expertise in other areas. Investment in equities requires a different set of characteristics which primarily includes patience and disassociation from the emotion caused due to market movement. It would be best to outsource these characteristics if you don’t carry them. The fees to the fund manager is primarily justified for this reason.

In summary, the answer to the above question of why the money is at a loss despite having all the resources at hand would be… “markets are cyclical and every asset class passes through different phases of these cycles. Buying at a high price will warrant a loss, however good the stock may be. The role of the fund manager is to prudently allocate assets based on whichever part of the cycle prevailing, educate the investor on why such actions are taken; instead of attempting futile methods of predicting, timing and justifying the outcome of the investments.

Our Testimonials

Aparna Ramesh, Client

Aparna Ramesh, Client

Pelican PMS investment strategy is based on strong fundamentals with emphasis on capital protection. Their investment policy is simple and sustainable and showing patience educating the clients on the investment model. The Portfolio reporting systems are organised with utmost transperancy. Thank u Pelican!!!

Ramki, Client

Ramki, Client

“pelican is one of fund managers managing my portfolio. ..there are many ways to invest and make wealth but wealth creation if it has to sustainable there has to be a methodicity which kanu their MD follows. .other pms invest the moment you invest..but in pelican they time the market and the nifty…I thought it was a contrarian approach but later I understood it was not so….in pelican you shall be assured of safety of capital and a definitive appreciation to your capital…patience to their approach may irk us but it worth the irk”

Ravindran V, Client

Ravindran V, Client

“The most important aspect of Pelican PMS is that their strategies are simple, safe and attainable. For a retired businessman like me who wants to relax, travel, and enjoy without a concern about the investments and security of his wealth, Pelican PMS is my top pick. When you add their periodic and exemplary reporting, I would recommend them as the first choice to anyone.”

Revathi Sanjeev, Client

Revathi Sanjeev, Client

With a hectic work schedule and changing scenarios that we need to keep abreast of, it is difficult to keep a close watch on the financial market too. But why should I worry when I have someone trustworthy to take care of it for me? I am a happy customer, who has turned a profit even in this volatile market, thanks to Pelican PMS, who are diligent in their study and manage portfolios of all their customers. Their approachability and drive towards customers’ satisfaction is remarkable. No investment portfolio is too small and due diligence is never compromised. The firm’s collective experience spans many decades and they apply this expertise thoroughly to advice their investors.

Srikala Venkatesh, Client

Srikala Venkatesh, Client

Pelican Holdings has been advising me and managing my investments for over nine years now. The amount of time money is kept in liquid funds before being deployed into stocks, made me initially wonder whether they would invest at all. The duration of holding while the markets moved up kept me guessing when they would sell. The outcome was good and satisfying. Having gone through the cycle once I am comfortable with the process, patience & method is the theme, not excitement. I like their service and reporting quality too. I wish them all the very best.

Suresh Kalpathi, Client

Suresh Kalpathi, Client

Pelican Holdings have been financial advisors to our Family for over two decades now. They work with integrity, are diligent and advise is based on fundamentals with emphasis on capital protection.Their execution and reporting are transparent. They have been ready to put in time & effort at anytime, through the years, to assist with data & information for reasoned decision making.

Vimal Kumar, Client

Vimal Kumar, Client

keeping in view the fundamentals of the investee company. They are in no hurry to deploy the funds, but rather wait till the valuation is right. This strategy has proven right especially in the current turmoil in the market for the past 2 years. – Vimal Kumar, Client. I am impressed with Pelican team’s patience to invest at the right time and at the right valuation, not swayed by market sentiments,