时间：2022-08-05 02:30:40
Amajor component of value creation for the investor stems from the proprietary processes, which an asset management company(AMC) develops to consider, select, manage and sell securities. Among other things, these processes are built to function within the regulatory framework, investment mandates and necessities of the market, making it a critical function for the company.
The key objective of these processes is to mitigate the risk exposure of the schemes and also generate optimal potential return from the decisions made on allocations and investments. Process-driven investment and portfolio management has an essential place in an AMC. In absence of the processes, the decision-making will be individualised, and may lead to emotiondriven investment calls.
Given the unavoidable emotional interference during investment decisions, the likelihood of increased concentration risk due to overoptimism or underplay due to excessive pessimism may skew the performance. Such constructed portfolios have the potential to cause relatively higher volatility. They may also lead to opportunity cost for the investor due to overlooked ideas.
A well-established and regularly monitored process allows for specialisation of various functions required in the portfolio management process. It also dissipates the possibility of emotional response to an idea, imbibes a disciplined and dispassionate approach to investment and allows conviction driven investments. Such a systematic approach restricts portfolio volatility and bring alpha on the underlying benchmark.
In Kotak AMC, we consider the inherent strength of the company based on its efficacy to conduct the business, the managerial expertise of its staff and the valuation it offers to the investor for the price it is selling at. On the debt side, our fund construction processes are built around providing risk-adjusted performance to the investor predominantly by means of institutionalised market expertise.
The detailed supervision of investment mandates, performance criteria, positioning of the portfolio and transactions, among other things, are conducted by the compliance department on an almost real-time basis. The larger evaluation and periodic monitoring is conducted by three-tiered committees, namely the investment committee, the risk committee and the board. This ecosystem provides the AMC the necessary strength to shoulder the fiduciary responsibility even in times of serious market distress.
Almost all major AMCs have structured their processes to optimise their fund management goals. The methods they adopt remains a unique determining factor that eventually begins to reflect in the comparative performance vis-à-vis the peers. Of course, as with all major policy decisions, reasonable time horizon must be accorded for its positive effects to be noticeable.