Investment Philosophy

We follow long-term investing Philosophy

We are guided by below 5 investment thoughts:

  • Diversification leads to more reliable results for retail investors.
  • A methodical approach is a key to fruitful investing.
  • Risk and return expectations are normally related to the profile of the client
  • Investment decisions should generally be undertaken after taking advisor’s view.
  • These principles form the core of our approach and are important for you to understand.


We believe it is a normally a good way of reducing uncertainty in your portfolio by spreading your investments across multiple asset classes run by multiple investment managers. This has the effect of reducing overall risk and lessens the impact that any single one of these can have on your portfolio. A well-diversified portfolio can offer a much smoother pattern of returns – giving greater consistency and lower volatility. Across asset classes (e.g. shares , real estate, debt) as different asset classes behave differently in various economic and market conditions. Across investment managers – who have different approaches (or styles) and who perform well at different times and in different circumstances to each other.

Disciplined Approach

We believe that really fruitful investing is not about chasing the maximum profit in any one year in any way but is about taking a planned and disciplined approach and avoiding the all too typical mistakes that erode wealth. An example of taking a disciplined line is not reacting to short-term performance but, rather, understanding that some managers or asset classes may not achieve as well as others (and may even go down) from time to time. Reacting to this by changing the portfolio can destroy value.

Risk and Return

We understand that risk means different things to different investors. In addition when we study risk in portfolios, we look at the volatility of the investment – or by how much investments fluctuates. Volatility and return are related and, in general, investments with higher volatility are expected to have higher returns – an extra return for accepting the greater level of fluctuations – whereas lower volatility investments are expected to offer lower returns – reflecting their greater stability. This is called the risk-return trade-off.

The range of expected returns between their maximum and minimum return varies between different asset classes. Debt has a smaller range than shares but, because of their greater volatility, shares are expected to generate a higher return than debt which have a lower volatility.

Investment Selection process, at Advisesure, begins with Individuals’ risk profiling. Based on which the portfolio is designed which is diversified into Equity, Mutual Funds- both equity and debt, ETF’s, fixed income instruments etc. as per individuals’ profile.

Why use advisor?

Many investors spend a great deal of time picking and handling their own portfolios rather than using the skills of investment experts. Often there is a cost to the investor of trying to pick their own asset classes, investment managers. According to a study, Individual retail investors lost close to Rs 8,300 cr during the sample period of 18 months, from January 2005 to June 2006, or Rs 5584 cr per year. What makes retail investors behave this way? The answer lies in two powerful behavioral instincts. One, their approach to valuation of their investment options is based on feelings rather than careful calculation under which, what matters is the presence or absence of a stimulus, in this case profits, but not the size of the gains (losses). Retail equity investors in India systematically lose out to other categories of players because they sell the winning stocks too quickly and hold on to the losing stocks too long.

Model Portfolios

Our Quant Automation process can avoid these mistakes because it does not get caught up in the emotion of investing which is often the driver for investor’s bad decisions. Model Portfolios are a series of centrally researched and maintained portfolio solutions created to compliment the asset allocation of our client’s investment profiles.

The portfolios we recommend for our clients consist of investment managers that invest with a long-term total return objective. This is combined with consideration to our client’s individual tolerance to risk and your lifestyle goals, needs and objectives applied.

Each portfolio has a strategic asset allocation model and a range of investment managers and is intended to give investors access to a well-diversified investment solution with good risk control and a well-balanced mix of assets.

Our investment objective is, therefore, more aligned to your objectives rather than the objectives of a larger financial institution, that is, they simply want to grow wealth, not perform in a relative sense.

Our Model Portfolios investment strategy is reviewed on a regular basis by the research team at Advisesure. We take a 360-degree view on initial and ongoing investment of our clients.

To enable our firm to provide our best “investment solution” to our clients, we strongly advise all clients to maintain their portfolio as per our specific Model Portfolio and Platform solutions.

Clients who participate in our Model Portfolio solutions as part of their client experience can be assured their cash are invested in the most appropriate and up to date portfolio offerings which are continually researched and reviewed, to offer a far more disciplined and consistent approach to their portfolio management.

Customer Experience

This investment philosophy when strengthened by our strategic approach of tax minimization, wealth protection along with risk coverage through insurance, enables that our clients benefit from personal service, genuine interest and quality advice. Expanding on this philosophy, we aim to:

  • Provide our customers with a unique ‘Lifestages’ approach, where we are able to provide advice in all stages of life.
  • Create a deep and meaningful bond based on mutual understanding, respect and trust.
  • Provide a planned ongoing client service offering which enables an effective and efficient delivery of our services in the client’s best interest.
  • Empower our clients with the confidence and knowledge to take control of their financial future.
  • Remove the concerns associated with managing finances including investments so our clients can enjoy life and pursue their lifestyle and associated goals.

If there are any elements of our investment philosophy which are unclear, or you are interested in discussing this further, please don’t hesitate to contact our office. We value relationships and open communication with our clients and we believe that all Indian should have access to quality advice.

If our investment philosophy holds true with you, please don’t keep us a secret. Feel free to share this document with family, friends or colleagues

Selection process for Equity Stocks:

  • Universe for Selection:

    Out of the universe of 5,500 stocks listed on the exchange, the foremost selection is done by automated quant process.
  • Automated Process:

    Quant Automation process considers the stock price volatility as well as the historical price performance and accordingly provides unbiased results. For volatility, the beta of the stocks while historical price performance for last 6-12 months is considered. A combination of different beta range and historical performance is used to design different portfolios. We have done a hypothetical back-testing of our portfolios.
  • Fundamental Screening:

    Here in, we try to ascertain the fundamental soundness of the stock. Parameters like the Business model of the stock, its Future Growth prospects, Valuations (like PE, PBV) and Return ratios are looked into.
  • Price Volatility:

    This filter helps to avoid selecting the stocks capable of sudden spikes/changes in the price movement. This is mainly to avoid jerks in the client’s portfolio and thereby ascertain smooth transition.

Selection process for Mutual Funds:

  • Corpus Size:

    Mutual Funds selection considers initially the fund size and corpus size of the scheme, as well as the Asset under management (AUM) of the fund house. For e.g. we consider the mutual fund schemes of selected fund houses and that too with AUM of more than Rs.250cr.
  • Historical Performance:

    Historical performance aids in finding the future performance of the fund and hence is looked in during the selection process. The schemes usually with a track record of out-performance vis-a-vis their benchmarks are capable of attracting investors and hence have large fund size.
  • Ratios:

    Volatility ratios like Beta, Sortino to name a few are taken into account while selection. Beta indicates the volatility/change proportion in the NAV of the scheme while Sortino, a statistical tool, measures the performance of the scheme relative to its negative deviation.
  • Asset Allocation:

    Asset allocation of the mutual fund schemes i.e. into equity or debt, different sectors of equity, thematic funds, etc. are also keenly observed before scheme selection in the portfolio. For risk-based conservative clients we prefer mutual funds which are debt oriented while for risk averse aggressive client’s sectoral equity funds could be beneficial.
  • Expense Ratio:

    Expense ratio, an important parameter, is on the observation radar so that it does not eat up a substantial part of the profits. Expense ratio is declared as a percentage of basic operating expenses necessary to keep the fund operational over the total AUM of the fund. It varies for varied mutual fund categories. For e.g. Equity oriented mutual funds have a maximum expense ratio of ~2.9% while the same ratio for debt funds is 1.6%.

At Advisesure, you can be sure to own a shirt of your own size for every particular occasion, i.e. an investment option/portfolio designed specifically for you to address your different goals.

Statistical Validation

We did a T-test of one of our portfolio to ascertain its out-performance vis-à-vis its benchmark. We have considered the yearly change in the portfolio value of R1 and Sensex since January 2009 and the result are as follows-

Sensex R1
Mean 15% 35%
Variance 3% 3%
Observations 68 68
Hypothesized Mean Differences 0
df 134
t-Stat -7.11

A T-test for two samples assuming unequal variance shows that the t-stat value is -7.11, i.e. beyond the range of +1.98, -1.98, which indicates that the variance for the two variables is not equal. Moreover, the mean for R1 is greater that Sensex (35% > 15%) infers that the R1 portfolio has outperformed the Sensex. Thus, the out-performance to benchmark is statistically validated too.

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