'AI can drive the rise of intelligent investing and usher new strategies'

How is your team viewing the current market valuations and preparing for possible corrections?

The investment team at 360 One Asset views current valuations as elevated, particularly in the mid- and small-cap segments. The valuation is being upheld due to strong earnings growth and economic momentum. Despite premium valuations, the equity market outlook remains positive from the long-term perspective. While some sectors may appear overvalued by traditional metrics, attractive opportunities still exist in a few. We focus on high-quality companies with robust balance sheets and strong cash flows. Our portfolio strategy focuses on long-term fundamentals collated on the backdrop of our proprietary SCDV (Secular, Cyclical, Defensives, Value Trap) investment framework and thorough, in-depth analysis.

Are index and factor-based passive funds a fad or a lasting investment strategy?

Index and factor-based passive funds are a significant and growing part of the investment landscape, not just a fad. They're gaining popularity with their cost-efficiency, simplicity and a focus on long-term, low-cost investing. Factor-based strategies focusing on value, momentum and low volatility are also more accessible now. While active management will have its place, passive investing will dominate due to its ability to deliver market returns at a low cost. We expect a hybrid approach will be crucial for investors.

Will AI impact your business? How and why?

In investment management, AI tools can analyse large data, allowing for faster and more accurate identification of opportunities and risks. We may see a rise in intelligent investing, aiding AMCs in launching newer strategies. AI can also enhance portfolio management by automating routine tasks, running simulations and providing predictive analytics to refine decision-making. It can also provide timely alerts, flag concerns or intimate positive developments in real-time. In client services, AI chatbots and personalisation tools can enhance client experience.

Rapid-fire questions

• If your fund house had a superpower for investors, what would it be?
  Investing at the speed of thought. Same goes for divestment strategies.
  
• The biggest mutual fund myth you'd debunk.
  That anyone can outperform AMCs or fund managers. During bull markets, everyone feels they're the best stock pickers. Fund managers invest years building expertise, follow a disciplined investing approach and are bound by regulator and fiduciary responsibilities, which people feel are easy to replicate.
  
• An unconventional asset class you'd add to your portfolio.
  Commodity ETFs (exchange-traded funds).
  
• A Bollywood movie that best represents the mutual fund industry today.
  Guru.

This article was originally published on October 24, 2024.