Interview with Ashi Anand, Founder and CEO of IME Capital

Radhakrishnan Chonat: Ladies and gentlemen, welcome to another episode of our Fund Manager Series where we bring you in-depth conversations with some of the sharpest minds in the investment world. And today, I have a very special guest, Ashi Anand, Founder and CEO of IME Capital.

Ashi has over two decades of experience in fund management, having played a key role in managing investments in ICICI Prudential as well as Kotak Mahindra. His journey in the Alternative Investment space dates back all the way to 2002, where he was involved in launching some of the first structured investment products in India, including the country’s first institutional arbitrage fund and capital protected fund.

Now, after years of observing structural inefficiencies in wealth management, he founded IME Capital. IME stands for Investments Made Easy, a boutique investment firm that prioritizes research over sales incentives and leverages proprietary technology to provide unbiased, transparent investment insights. IME’s RMS, we’ll get into the details of it later, is designed to bridge the gap between fund managers and investors to ensure that crucial financial insights reach the right people without bias or mis-selling. Beyond his professional accolades, Ashi is also known for his deep analytical approach to investing and his strong stance on ethics, client-first wealth management, etc.

So, ladies and gentlemen, let’s dive into his experiences, the philosophy behind IME Capital and how technology is shaping the future of wealth management. Ashi, welcome to the show.

Ashi Anand: Thank you so much for having me, RC, and thank you for such a glowing introduction.

Radhakrishnan Chonat: Let’s start with you, Ashi. You have spent over two decades in the fund management industry before launching IME Capital. What specific challenges in wealth management industry that you saw that led you to start IME Capital?

Ashi Anand: Okay, thanks a lot. So, let me give you a bit of a background. I think the foundation of IME Capital really stems from these two decades of working as a fund manager. Obviously, as a fund manager through ICICI and Kotak, we’ve interacted with all the wealth management firms, both the central research teams and individual private bankers as well. Now, just over this kind of experience, and I think this is not just my experience, it’s probably true for all fund managers. You’ve consistently noticed investors coming to your funds, sometimes very often at the wrong time. If you look at when funds raise money, a small cap fund will tend to raise the most money at the height of a small cap boom. Thematic funds get kind of launched when the theme has more or less fully run.

So, the first problem is investors coming in at the wrong time. The second main kind of issue is that we very often experience investors coming onto our funds, and they come with absolutely wrong expectations and an understanding of what that fund is poised to deliver. A decent example of this is, I was managing a dividend yield fund at Pru ICICI. This was positioned as a low-risk, low-return strategy. It was considered to be a kind of a bridge between fixed deposits and equity investing. However, back then, so this is back in 2003, 2004, we were very heavy on high dividend paying companies. These tended to be a lot of PSUs, so a lot of banks, a lot of oil and gas companies, etc. And you went through this whole deregulation, which led to some of these companies doing exceedingly well. There were investors who came onto our fund with expectations of this being a very high-return fund. Low-risk, high-return was never positioned like that. Kotak was managing a five-year lock-in fund. It was a quasi-private equity structure. We’ve had investors coming in who were 75, 80 years old, absolutely inappropriate to be going into a locked-in structure, etc.

So, this is the fundamental issue. As a fund manager, you really want to deliver returns for your clients, but you need clients to understand the funds that they’re investing, what that fund is doing, and also what’s the right time to invest, what’s not the right time to invest. And this is something, like I said, everyone in the industry faces. Now, why is it that I say that there are certain fundamental issues in wealth management that we are trying to address? These issues basically stem from two or three factors. The first element is that if you’re looking at the wealth management engine in India, according to us, there’s a very clear focus on sales. It is a sales-first approach.

Most of the larger wealth management firms are either large financial institutions. Even the more boutique firms tend to be people who’ve come in from a sales or a relationship management background and have launched their boutique wealth management firm. The people who are heading these firms come in from a sales orientation. The large majority, if you just look at the proportion of sales to research, it is very, very heavily weighted towards sales. Research is a bit more of an after function. And given commissions, given sales incentives, sales targets, and all of that, there’s a very strong focus on selling, selling what the investor will buy as compared to really trying to advise what makes the most sense for that particular investor. This is one element.

The second element is if you just understand how the industry is structured. There are four distinct layers before an investor gets insights into what are the funds that he should invest in. They are the fund managers who actually manage a particular fund. You then have central research of product teams and at wealth management firms who do due diligence into these funds. Very rarely do any of these people actually have actual fund management experience of themselves. These are outsiders who are looking in and trying to evaluate a fund when they’ve never actually managed money themselves. They’ve never worked in a fund management ecosystem.

You then finally have the relationship managers. Now, these are private bankers or relationship managers are essentially salespeople who are trained to appear as strong investment specialists. But the bulk of the time is actually going on the street talking to investors in sales. They really don’t have the kind of time that someone like me would, someone in a research team would to be able to really sit and analyze what’s happening at the macro economy, what’s happening in sectors, industries, different market caps, etc., to be able to understand where to position a portfolio. So the investor is talking to the RM. By the time information is reaching them, it’s gone from the fund manager to the product team to the RM to the investor.

There is a issue of Chinese whispers, there are conflicts of interest, there are biases, there’s problems sometimes of a limited level of understanding. This has always been an issue. It’s become a much greater issue over the last decade, where you’ve gone from a handful of mutual funds and just a few amount of PMSs to the sheer explosion that we’ve seen in the alternative space, the number of PMSs, the amount of AIFs, global investment options, etc. So effectively, how can this industry rate and how can you generate returns for investors when the investor is at the bottom of the value chain in terms of insights? And that is something which I believe is a fundamental problem. And that is what we are essentially trying to address at IME Capital. We are trying to ensure that investors have much better access to insights. We do this via a proprietary tech that we’ve developed for the IME RMS. And the whole idea is to ensure that when an investor is seeking an investment decision, they really understand the overall context behind why they’re choosing to go with a particular fund.

Radhakrishnan Chonat: Got it, got it. And I’m glad we are having this conversation because just last week, Naren, I mean, so-called controversial statement where he basically told investors lock, stock and barrel move away from small and mid-cap. And there was a hue and cry made from the other side that we have launched funds and stuff. So this sort of gives clarity as to what are the four layers within a mutual fund and how fund manager versus sales team, they have a different viewpoint. I’m sure this gives clarity as to what was Naren’s intended statement versus what it is made out to be. Do you have any comments on that? Where do you see the conversation heading? Because I think there’s sort of like, you know, name calling and, you know, nobody’s looking at his track record and stuff. So any views on what should be the end of this debate?

Ashi Anand: So I’ve had the pleasure of working fairly closely with Naren for over three, four years while I was at Pru ICICI. Obviously, he was in a different department. I was with the PMS. He was with the mutual fund. But I think the one thing which is really great about Naren, as in he will speak his mind. Very often when people go out on media, when they’re going out in public forums, you’re trying to keep kind of organizational interests or business interests kind of first. Naren is someone who I have known and he’s actually done this for many, many years actually does go out and speak what is in his mind. I think the core element around staying away from small caps, staying away from mid-caps, right? And I think the thing that really caught a lot of attention is that SIPs, even SIPs right into the wrong asset class is something which can actually lead to fairly weak returns if you’ve not invested in the right asset class. But this is something in fact, we wholeheartedly agree. It is very important. That’s one of the things you’re also trying to do what I mean when you talk about research first, right?

You have to understand when you are deploying capital; a lot of investors end up focusing on past performance. This is very often the outright worst indicator that can be seen, right? It’s sometimes a reasonable indicator. Sometimes it’s a completely wrong indicator because, and we all know the way small and mid-cap have kind of drastically outperformed our large caps since COVID. Now there are very clear areas of froth in this space. There are companies where honestly, no matter what you look at in terms of future growth outlooks, you just cannot justify those kinds of valuations. Whenever you’re looking at valuations, you’re looking at valuations in the context of quality growth and the price that you’re paying for it.

You have companies of clearly a relatively low quality where growth near term may be interesting, but you just can justify it in the context of value. Now, if you go into such an asset class at the wrong time, you really, no matter what you do, you will struggle to kind of make returns. So getting in at the right time is something which is very important. And I personally feel it is very important. That’s also fundamentally what we are trying to do at IME Capital, right? Views at a fund manager level, where you are not a typical fund manager, typical research team is not client facing, does not have sales incentives. Most of us are just geeks who love being in front of our screens and reading research reports and analyzing things, etc. Those views is actually what needs to flow down to the investor, right? So I kind of completely agree with what Naren said.

Radhakrishnan Chonat: Thank you. Thank you, Ashi. Shifting gears a little bit, you mentioned about the research management solution that’s unique to IME Capitals. So can you walk us through how it works and how it improves the investment decision making? And you said, there’s a sort of a rank for all the mutual funds and PMSs. And you also mentioned that many firms rely on relationship managers to guide the investors, whereas yours is a research first approach. So how is this different and do you still give personal and strategic advice to investors?

Ashi Anand: Okay, excellent. So let me just answer. So I think firstly, it comes from this underlying philosophy, right? Of this underlying problem that we identified of this weak flow down of insights. Very similar to what I was just responding to with relation to Naren. The idea is that you’re trying to bridge this gap. There are these artificial barriers that exist. There’s a fund manager, there’s a product team, there’s an RM, there’s an investor. The investor doesn’t have access to the product team or the fund managers insights, right? That is fundamentally what we’re trying to solve.

So when we started IME Capital, this was the founding principle or the founding mission of trying to — the larger problem we were trying to solve. The way it is basically structured and the way it works is that the IME RMS is a proprietary technology where we sit and we document our insights. So we’ve gone and we’ve done a rating and a very detailed rating, a very, very detailed analysis of all investment options that exist for investors. We’ve covered all the mutual funds. We’ve covered over 200 and I think 25 PMSs, a large number of AIS and also global investment options. All of these funds have been rated using our proprietary rating methodology, which focuses not just on past performance or quantitative data.

I can tell you when I was at Kotak, I was managing an international fund. I’ve actually had the pleasure of going through the due diligence of a lot of global pension funds, sovereign funds, etc. If you look at it globally, the whole focus is on qualitative aspects. The pedigree of the AMC, they’re different. The same fund managers operating in one AMC versus another AMC. Certain AMCs actually give you an ability to outperform. They give you a better ecosystem within which you can actually drive that performance. So we look at the AMC’s pedigree. We look at the fund manager’s pedigree. We look at elements like is the fund manager a critical owner and what is the likely longevity of the fund manager with the firm? What happens if the fund manager leaves? We look at the investment strategy and I think more importantly than looking at the investment strategy, we’re not just looking at the presentation saying this is the acronym, right? So Motilal will have QGLP, Abakkus will have MEETS, [Indecipherable], right? Everyone has an acronym of philosophy infographics to say how great the philosophy is. The most important element is, is this actually being followed?

So we look at the investment philosophy from a perspective of has it actually been followed? And when we look at performance, we look at it from a longer term consistency on annual returns, not trailing performance, which can be very misleading. There are multiple elements that go into this rating and we use this to basically rate all these funds on a one, two, three, four, five star basis. There are five, six parameters that go into each of these. Each of these parameters are individually rated and these insights that have born into this rating are documented on the IME RMS specifically in a manner that is meant to be easy for an end investor with no finance knowledge to be able to understand. We use five star ratings, we use color codings and we use very short snippets to ensure that our understanding as a central research team is what the end investor has direct access to.

Now, one important element in terms of the way it’s structured, all of these qualitative aspects that I told you, when you go on our platform and you click on a fund, you will first see all these qualitative elements around the fund strategy, the team pedigree, etc., all of that performance actually comes down last. We want investors to make sure that they understand the context within which performance is being delivered.

Now, there are a couple of very important things that this RMS solves for. Firstly, investment advice around fund selection happens centrally via a non-sales incentivized, non-client facing research team. For every fund, we very clearly put down what we like, what we don’t like. Every fund will have certain pros and cons. What tends to happen in the normal industry is that the pros are focused on, the cons are kind of hidden away a bit.

The third element, so every investor gets a complete perspective around our view on a fund. The third and very important element that we’ve been able to achieve is a single point of truth for every one of our investors. No matter how large or how small, no matter how close to Bangalore, which is our headquarters, or you could be in the other end of the world, you could be a US or Canada based client. Every client is seeing the same identical view on a fund. Now, why is it that the industry doesn’t do this? It’s actually very negative from a sales perspective. If you are a private banker trying to approach a new client, you’ll ask him for his portfolio, you’ll say, I’ll do a portfolio review. That guy may have invested in all the best funds, but you’ll find reasons to say that these are the problems in these funds and therefore get out and invest here. That fundamentally cannot happen at IME Capital.

There is a single point of truth. So the RMS helps ensure that central team insights around what an investor needs to understand around a fund directly reach the end investor. And there’s no filtering that happens as it’s common in a multi-layered communication. The private banker’s role at IME Capital is then to really sit, identify an individual investor’s requirements, build a financial plan, build something called an investment mandate. And this is really a construct that I’ve taken from fund management. And we’re trying to adapt that to individual investor portfolios.

So before any fund manager launches a fund, the first thing that you identify is for this particular strategy and for the kind of investors you’re trying to target, what are the areas of the market you’re going to operate in? Is it going to be large, mid or small? Is it going to be sector-focused? So you define a lot of constructs around how you’re going to construct your portfolio. This is the investment mandate process that our private bankers do with our investors, where you sit and you identify why a PMS versus a mutual fund. Mutual funds have certain benefits, a PMS has certain benefits. What is relevant for that particular investor? Within equity, what large cap, mid cap, small cap? And it’s a fairly nuanced kind of conversation. But we use that to basically shortlist the specific kind of structures, asset classes, and categories that are relevant for the investor. The investor then has a view on the armistice that will show him only those funds. And then within that click of a button, our view on the fund, and you can really use that to basically, so we’re just trying to improve the way portfolio construction and decision-making happens. So that’s kind of how it works.

Radhakrishnan Chonat: Got it. Very interesting. You also, other than the wealth management piece, you said you also have a PMS strategy, especially when it comes to digital disruption, and identified a couple of public companies. Can you walk us through how digital disruption is reshaping industries, especially in India? And what is that Digital Disruption PMS is all about?

Ashi Anand: So actually, let me just start off with a, if you read Peter Lynch’s One Up on Wall Street, one of the — and I think it’s true for individual investors, it’s also true for large institutional fund managers. Just look at your own day-to-day life and see where you are spending your money. See where you are moving. And if you just look at the way transactions have shifted in India, we did this study where we basically just looked at different forms of commerce, and how quickly that landscape has changed.

A decade ago, all payments used to happen via debit card, via a check, or going to the bank and take on cash. This has been completely transformed to payment apps. If you’re looking at entertainment, it used to be TV and used to rent a VCR. Everyone now uses OTT platforms. Netflix was launched in India only in 2016. Communications used to be phone calls and SMS. WhatsApp was launched only in 2016. It’s completely transformed communications. Shopping used to be going to kind of, you know, the LinkedIn, to the high streets of your city. That has been kind of completely transformed towards shopping online across various online platforms. Insurance is reduced from agents. You can now buy it online.

You are seeing a very, very rapid shift or what we call value migration away from traditional forms of interaction towards digital forms of businesses. Now, this is across finance, consumer, B2B, classifieds, recruitment across all elements. You are seeing kind of the businesses that are going the fastest are all these digitally native digital platform businesses. Now that is kind of, and when we looked at, because we run a wealth management firm, when we looked and said we wanted our clients to get exposure to the space, which is clearly the fastest growing, there were no pure digital funds that existed. There were certain digital funds, but they all have a tremendous amount of style. Your normal diversified funds, which are supposed to give you exposure to the fastest growing space in the Indian economy had low single digit exposures. So which is where we kind of think there’s a very clear kind of investors, the end investor is not getting exposure to what is the fastest growing segment of the Indian economy.

And ultimately, the biggest kind of driver of stock price performance, especially from a fundamental long-term perspective, is businesses have to grow. This is a fundamental problem. That’s why we launched the IME Digital Disruption. It’s on the Valcreate PMS platform. We launched this actually in 2000. So we launched this February 23, at a time when everyone was running away from the space. It was — there was this complete havoc. NASDAQ had crashed, I think, 30-40%. Your Zomatos, all the digital platforms had actually fallen significantly. We actually saw that as a very interesting opportunity. Now, what is it that makes us so confident about the space? If you understand how digital platforms work, and this is where we believe listed market investors don’t really appreciate the global digital business playbook. There are basically four distinct levels that digital businesses go through. So a platform is basically nothing but a business that connects a buyer and seller.

In order to build a platform, you first need to solve something called a cool sub-problem. You need to get buyers and sellers on to the platform. This costs money. Once they’ve got them on to the platform, you really need to spend very aggressively to change their behavior. They used to pick up the phone and call the local restaurant guy, and someone would deliver. You want them to sit and now use your Zomato Swingy app. So huge discounts. You really have to incentivize people very significantly to change their behavior from an old way of operating to a new way of operating. Until you have not achieved a couple of elements, which is one, you believe you’ve fundamentally changed user behavior, and secondly, platforms will always migrate towards monopolies, strong duopolies. People, both buyers and sellers move towards platforms that have the highest levels of volumes. We see this in the stock market with NSE, BSE, etc. You have to ensure that you’re going to be one of the dominant platforms.

Now, the moment you have achieved this, and according to us, you only go in for listing once you believe you’ve achieved these two elements. You can really start focusing on monetization. When you go deep into these companies, the levels of monetization levers, a new kind of user fees that can be charged, higher commissions you can charge from different people on the platform. There’s a huge amount of costs that are related to hyper growth that are not required over the longer term. So absolute costs itself can reduce. So I think growth is something which is very clearly understood by the markets that yes, business is moving here and these companies are likely to be able to grow at 15%, 20% sustainably over the longer term. And we also have very strong underlying fundamental drivers in place.

You are still — I think what the government has done from a digital ecosystem perspective, right? The Aadhaar, UPI and various other initiatives is very transformational. India is still coming online and RC, even people like you and me, right, as in the urban upper classes, etc., even we are still going through our stages of digital adoption. There is still a lot that we buy physically that can move online. This is a trend that we believe will only accelerate going forward. And it will especially accelerate when the next generation, right, where people who’ve not, when I was in college, the internet was kind of launched. The first smartphone, I was already improvising. The first time I bought something online, I was probably 10 years into fund management, right? I was used to traditional ways of interacting. I had to change that. This is not true for people who’ve been shopping online from college itself. That will drive growth in that growth visibility according to us is exceedingly strong. We’ve got long tenure models that kind of indicate that even 10 years down the line, you still have penetration that still has room to grow.

A combination of growth and the shift towards not just profitability, but very high levels of profitability lead to a very strong combination for value creation. Now you’ve seen that in US tech over the last decade, right? The way NASDAQ has kind of outperformed the overall indices. We believe you’re likely to see something very similar in India over the coming decade, right? And which is why it’s, we have a very, very kind of concentrated, we normally don’t like thematic funds, but I think this particular fund has a very, very clear space and position given what is happening in the underlying economy. And just going back to that, right? That element that like, even what Naren was indicating, right? This whole — see you have to go into the right asset class. We believe that digital is really the place where value is migrating towards. And this portfolio is basically meant to be positioned towards that.

Radhakrishnan Chonat: Excellent. So the digital disruptors, these are all publicly listed companies and how many companies do you have in the portfolio, roughly?

Ashi Anand: So the way this is positioned, it’s positioned as a quasi private equity strategy. We are not sitting and trying to kind of beat the Sensex or BSE 500 or anything in a particular year. Similar to private equity, what we are very confident on is if you buy today, five years, seven years down the lane, we believe these are going to be some of the largest companies in India. A lot of these we believe will enter not just indices, but the mainstream indices. They will become prominent parts of most mainstream portfolios. We also believe, you know, the way you talk of an Asian Paints or Kotak Mahindra Bank or Hindustan Lever, Nestle today, we believe these are going to be those very high quality franchises in the future.

The value creation from now until five, seven years down the line, we believe is going to be very high, very disproportionate. Now, what happens is when you’re taking such a long term view, you have to be very, very careful around the individual companies and the fact that this company has the right to be the winner seven years down the line. There are over some 25, 30 companies that exist in the universe that we define as digitally first, digital native platform businesses. However, we have only about 10 companies in the portfolio. And even when the 10 companies in the portfolio are top five, account for over 75%, 80% of the overall portfolio. It is highly concentrated towards what we believe are companies that have clearly demonstrated the right to be the future long term winners. So volatility on the portfolio will be through the roof.

We actually had the benefit of like great upside volatility over the last two years, where a year and a half into launch, we had doubled investor money. And I think it was one of the best performing PMSs in the market over the last couple of years. We were ranked last year three out of all funds on PMS Bazaar. However, but you’d also probably see something similar on the downside. When you have four or five companies being 75%, 80% of this portfolio, if those companies are underperforming, we really don’t look at this on a year on year. We tell investors, please come in with a five plus year time horizon. This is very different and very distinct from other funds. So that’s why the portfolio is positioned in that particular manner.

Radhakrishnan Chonat: Got it. And with a lot of new quick commerce firms planning their IPO, so what are your views? Will you be investing in them? I’m just asking, you know, what are your views in terms of valuation? And how do you see quick commerce disruption happening? And are there any views around those companies?

Ashi Anand: There’s quite a lot of views. Unfortunately, some of it is — some is clear, some is not as clear, right. So I think at the first level, so we already have a very large exposure to this piece. We hold around 30% of our portfolio is Zomato and Swiggy. And if you dissect Zomato and Swiggy, more than half of their current valuations would actually be accounted from this whole quick commerce opportunity.

I’ll just go back to those four stages I spoke about. But actually, sorry, before I get into that, as an opportunity, one of the big things we look at is the target addressable market. It’s clearly, according to us, the largest scam in the entire digital space. It is the most interesting opportunity which is out there. Now, given that, we believe there are going to be a lot of people who’ve entered. Unlike your kind of food delivery business of a Zomato or Swiggy that have gone through that cycle of a lot of competition, five, seven, eight players all trying to compete to be in that space. The moment you are in that ecosystem, you cannot focus on monetization.

You have to focus on attracting people onto your platform so that you are one of the dominant platforms in the market. There will be entrants which will come in. We believe the next year, year and a half is likely to be very aggressive from a quick commerce perspective. You are going to see a number of new entrants coming in. So, Zepto, Swiggy and Zomato, Swiggy is Instamart and Zomato is Blinkit, are clearly the three leaders here right now. But Flipkart has announced intentions of coming in. StarBazaar has announced intentions of moving towards a more quick commerce format. We believe a lot of other players are going to come in.

The opportunity is so attractive that we believe in the near term, trying to focus either on unit economics or on profitability or monetization is the wrong strategy. You need to focus on actually ensuring that you become seven, 10 years down the line, you are one of those dominant two or three players that control the grocery ecosystem and it’s actually moved well beyond grocery. But you control that quick commerce ecosystem in India.

Now, what therefore in our view is going to happen is in the near term, both Blinkit and kind of in some amount for Swiggy are going to actually see much more aggressive expansions. We also believe there probably need to be more aggressive discounts. You’ve already seen Blinkit move from a quarterly breakeven to a INR100 crore quarterly EBITDA loss last quarter. We believe this can also expand. But you need to be — ensure you’re one of the dominant players. We believe that both Swiggy and — both Blinkit and Instamart have very clear rights to win. But the next year, year and a half is going to be this very aggressive space where people are sitting fighting for market shares and that’s when the future will evolve.

So unlike a lot of the other digital spaces where you have longer term unit economics, change of consumer behaviour, dominance has been established. This space is something where we believe those parameters have not yet been completed. And therefore we believe it’s the most attractive space to be investing in India. But for anyone with a year, two year kind of investment horizon, it may not pan out because just in our experience, listed investors don’t like long-term investments that impact near term audience.

Radhakrishnan Chonat: True. Shifting gears a little bit, Ashi. AI disruption, I know everyone is talking about that. So what are your views on asset management or wealth management industry and where do you see wealth management industry in India taking shape in the next? Because there’s still a lot of addressable market, not many people take care of their wealth other than putting it in real estate or gold. The wealth management industry itself is in its nascent state. So how do you see AI helping or disrupting the industry?

Ashi Anand: So there are actually two different elements. So first of all, just the outlook on wealth management and asset management independent of AI and then the kind of implication of AI on it. Just very, very clearly, the longer term growth potential in capital markets as a space is extremely attractive. It could be asset management, wealth management, broking across the space. India has traditionally over-invested in gold, in bank fixed deposits and real estate. All of these as an asset class in terms of if you look at risk-adjusted returns and you take into account various other elements of risk. Real estate have a lot of concentration and operational risk.

When you take into account tax inefficiency of bank FDs, etc., some of these are just really poor asset classes to have as prominent parts of your portfolio. If you look at any other global developed market, even other global emerging markets, the share of household savings in capital markets is substantially higher than India. I think just very clearly, this trend that you’ve seen of the very sharp increase in Demat, the sharp increase in SIPs, investors investing directly on their own in equities, not recommended but still as in that is a trend.

I think this is something that is still in very early stages and we believe for the next 5, 10, 15 years, very, very clearly there’s a growth opportunity. It comes back to value migration. Value needs to migrate from some of these traditional asset classes that are suboptimal towards more efficient asset classes that are available in the capital market space. You’re still in nascent stages and therefore this is something which can be very attractive from a growth perspective longer term.

Now AI is something which I think not just for the wealth management industry but across industries. At least in the near term, perhaps some point 15, 20 years on the job line, it’s taken all our jobs and their doomsday scenarios and all of that. But at least over the next decade, AI has the ability to significantly improve various operational issues, research issues, insight issues, flowing down of conversations. There are many, many elements where AI can actually significantly improve or enhance the productivity of existing wealth management or asset management teams.

So say for example, internally at IME, we use AI quite extensively when it comes to some of our research. We cover some 200-250 companies that we’re kind of actively tracking. You obviously can’t sit on 250 concalls. But the ability to upload a concall transcript and get a good summary from AI, what happens is you really need to learn how to use it. We believe some companies are going to end up being better at using AI than others and that will lead to a significant improvement in the overall productivity. You may not even notice the fact that some of this is being AI delivered but there are going to be certain companies that will kind of lead, that will turn around your forms faster, where they will open your account faster. You raise a query that will be answered faster and better.

So the way we kind of look at AI is companies and sectors that kind of adopt AI properly in the right way earlier will actually be eventual winners. It will also help broaden the overall market because there’s certain parts of the market which may have been difficult to reach earlier. With the help of AI, it becomes more efficient to reach some of these markets. A digital honesty is where there’s sort of big other things. It expands the market. We believe AI will also help expand various markets, definitely in capital markets but it’s something we see across the board. It’s something very, very interesting and from a fund manager perspective, trying to understand and evaluate how AI is going to shape company earnings is something which is very, very interesting and we’ll see going forward.

Radhakrishnan Chonat: Excellent. Ashi, if I were sort of to ask you to recommend at least three books for my audience that is listening to this podcast, maybe related to finance or investing or across the board, what would be your top three book that you would recommend?

Ashi Anand: So actually there are a lot of books, obviously. I think the one clear thing is anyone interested in finance, the more you read, the more perspectives you get and that’s something which is something very important. I think people should constantly be reading especially when you’re interested in finance and investments. Trying to narrow down the three books.

So let me see, I think one clearly which there’s One Up On Wall Street by Peter Lynch. What we like about that is that a lot of people talk about Warren Buffett but Warren Buffett really has certain benefits. You are an owner-manager. You control the cash flows of a company which itself leads to a lot of the return comes from that structure. However, we aren’t in that same favorable position. So I think the reason One Up On Wall Street is that it talks about how a fund manager really operates, given those kind of constraints. And I think the way he deciphers down equity stock investing to just understand what’s happening at a business. Look at what’s happening around you. As in don’t look at a technical chart but understand businesses, understand value migration. It’s one of the best books according to me from trying to learn investments.

The second book and I think this is important because people underestimate volatility and underestimate kind of what’s happening from especially black swan events or whatever. So Nicholas Taleb have a couple. There’s one which is Fooled by Randomness, the other is The Black Swan. I think there’s a lot of elements around understanding how some of the stuff is random and how this big disproportionate events happen from time to time and no matter what we do they are going to happen and how do you prepare for that. I think those are again excellent kind of books to kind of read.

The third one is, there’s a book called Market Wizards I think. And that’s actually a series of interviews with a number of institutional fund managers in developed markets. There’s this thing that globally active managers don’t outperform. In this book they’ve interviewed some 15 fund managers each with a decade-plus experience of consistently having outperformed the markets. You really get a lot of interesting perspectives because it shifts from someone who is quant based to fundamental, someone who says meeting managements is very important to someone else who says they specifically don’t talk to managements. So you get a lot of interesting insights from that book. So these would kind of be the three.

Radhakrishnan Chonat: Excellent, excellent set of recommendations, Ashi. Thanks a lot for catching up with us and highlighting some of the stuff that you do at IME Capital and also giving us an idea about overall wealth management landscape in India. I look forward to more such conversations with you.

Ashi Anand: Thanks a lot RC, it’s been an absolute pleasure.

Radhakrishnan Chonat: Thank you.