Bajaj Finserv will be using its proprietary INQUBE investment process to harness three sources of sustainable alpha: information edge, quantitative edge and behavioural edge. Its work on harnessing behavioural edge holds significant potential – especially the focus on identifying and differentiating between trends and reversals - and will be a cornerstone of the team’s efforts to deliver outperformance.
The investment philosophy lays equal emphasis on avoiding mistakes and seeking out alpha opportunities, the aim being to deliver superior risk adjusted returns over time.
The fund house believes in launching active funds only in categories where it sees scope for generating sustainable alpha. It will look at a passive strategy for large caps and will also actively pursue the promising new space of smart beta funds.
Its first equity fund – a flexicap fund – has now been launched, with an emphasis on investing in megatrends. It has identified 6sources of megatrends and considers how each of these megatrends is impacting different sectors and businesses, in order to make a short list of the most promising winners that can emerge from these megatrends.
The fund promises to be genuinely flexicap – with an ability to nimbly move across market cap segments without being overly influenced by benchmark weights. Unlike many benchmark aware peers that stay with 70-75% in large caps, this fund can go up to 40-45% in mid and small caps, if there are enough bottom-up opportunities that merit consideration.