About Us

Investment Philosophy-InQuBe

Our Investment philosophy reflects the idea, that we as an organization believe may generate a good return on equity investment in the long term, for our investors. It dictates our goals and guides decision making.

Equity

At Bajaj Finserv Asset Management, we focus on the fundamental attributes of companies. We believe it is the quality of the company’s business and management that creates or destroys wealth for the investors over the long term. And since the markets are not completely efficient, i.e., they don’t factor in the future accurately into the prices, there is an opportunity to invest in good companies at a price which may be lower than their intrinsic value.

To achieve our objective in a disciplined pursuit, we have a three-stage investment philosophy called InQuBe, which is a synergy of informational, quantitative and behavioural edge.

Information Edge: This edge is about collecting relevant information about economies, businesses and markets ahead of the others to ‘outperform the market’ based on superior information.

Analytical (Quantitative) Edge: Even if investors don’t have material information earlier than the crowd, they can still generate better outcomes if they are able to process the information better. The investment team develops models and algorithms with enhanced predictive power to forecast the next move. This is the analytical or the quantitative edge.

Behavioural Edge: As the name suggests, this edge is achieved by superior behaviour in reacting to the inputs available to seek to maximize alpha. Behavioural managers try to explore situations where securities are mispriced by the market because of behavioural factors.

Behavioural edge is split into two parts:
a) Taking advantage of overreaction or under reaction by the market in either direction
b) Improving one’s own decision-making process to avoid behavioural pitfalls

Our InQuBe philosophy guides us on our goals and our investment process provides the path to it.

Fixed Income

For the fixed income market, the most important aspect is the quality of the asset. Our focus is to create an investment universe of borrowers who have the ability to service and pay back the debt. We evaluate whether there is adequate cover and understand the covenants wherever applicable on securities.

Next comes liquidity management. Here, we use tools to monitor liquidity and duration of the portfolio. It is important to conduct the stress tests regularly to understand portfolio liquidity risk.

Returns have to be evaluated under the lens of risk-adjusted return. We wouldn’t compromise on the quality curve for higher returns. Right selection of security and duration seeks to provide the investors reasonable returns without taking commensurate risk.