Creativity is born in an environment of Constraints
How limitations help develop creative solutions
1) The conventional thinking about investment is for getting high returns one has to take high risks
2) Thus Returns has a constraint called Risk
3) People could have accepted this and life would go on but human mind never accepts limitations
4) That’s when creativity takes birth
5) The question that naturally comes to mind is why can’t we have great returns without much risk
7) Like say Equity Returns with Debt Safety
8) The process to provide this product began with traditional Asset Allocation linked with age based thumb rules like 100 – Age
9) This further led to valuation based Rebalancing of Assets as the science of technology and algorithms developed
10) The BAF and Asset Allocator category showed that awesome returns with minimum risk was possible
11) The Age old concept of High Risk High Returns was thrown into the dustbin
12) But what about those who wish to buy small caps and mid caps?
13) Why simply accept the limits of Valuation based Rebalancing Funds
14) Why accept that a small cap can’t be optimised
15) What does the world optimise mean?
16) This word got very popular with Search Engine Optimisation in the post Google Era
17) When you put a search term, it is important to find exactly what you want
18) This is achieved by optimising the search engine from time to time
19) Today you put a search terms and the results you get are nearly meet your exact expectations
20) This wasn’t the case earlier and thus the creative mind never accepts limitations and keeps on refining the process
21) Nothing may be perfect but everything càn be improved
22) So the search of optimising Mid Cap and Small Cap investing led to the development of Filter SIP in my mind
23) I am not sure if anyone is even practicing this or perhaps some may be
24) The Process of Filter SIP is simple but powerful
25) Before your SIP amount is invested in the mid cap fund, run it through a debt fund (liquid plus fund)
26) Step one is to do SIP in the liquid fund
27) Then the Liquid Fund will do a booster STP into the Mid Cap Fund
28) What does this mean?
29) It means based on the market valuation (whether market is expensive or cheap) funds will move in a calibrated manner from the Liquid Fund into the Mid Cap
30) This means that more money will get invested when market valuations are less and less money will get invested when market valuations are more
31) This way one can optimise returns because Returns are not just about investing in good Assets but it is also about investing in good Assets at the right valuations
32) Thus there are ways and means to enhance returns using modern methods using principles of
33) Pure Diversification, Asset Rebalancing & Velocity of Rebalancing which has been made possible by the advent of algorithm technology
34) The future will be about Creating Structured Solutions based on both Market Valuations & Need Valuations
35) Equity Products are Volatile and Debt Products Yields have nosedived
36) Should we accept this?
36) Never, Because every limitation opens up doors of Opportunities fuelled by the Power of Creativity
I rest my case
