Here is the transcript if you would like to read it instead:

Namratha:

Welcome back to Kairos, a podcast on financial planning where we talk about doing the right thing at the right time. I am Namratha from the planning team and it is good to be back on Kairos. I have Harshil from ithought strategy team today for a quick chat. Hi Harshil.

Harshil:

Hi Namratha, thanks for having me on Kairos.

Namratha:

So, We have been talking for a while on financial planning and how important it is. Harshil, can you just share your views on financial planning as an exercise.

Harshil:

Well, when I speak to people about financial planning their immediate response is an ‘eye roll’. They perceive it to be a dry and boring subject. But that should not be the case. To quote Benjamin franklin- one of the founding fathers of America “By failing to prepare, you are preparing to fail”. It is simple, if you want to secure your future and the people who are dependent on you, you need to plan. You need to start taking a comprehensive look at your financial situation, identify your goals, and have a disciplined approach in saving towards it or have someone like Namratha help you do it. Planning is also a continuous process, which is to say, your plan must be re-visited as and when required. This need may arise as and when your career grows, your family grows or as your financial situation changes, whatever the reason may be. It is important to keep your financial planner or advisor updated and re-visit the plan on a regular basis.

Namratha:

So basically, an unimplemented financial plan is like a train standing on a railway track. It is not sufficient for a train to be on the right track. The train needs to run on the right track to reach its destination. Similarly, a successful plan is one that is implemented and followed diligently. The client, planner and investment manager play an important part in implementation. The investment actions prescribed on the plan may see specific investment actions for specific goals. To make the plan a success, peak synergy is required between the three parties. A plan is greater than the sum of its parts. It is important that we recognise this.

So Harshil, when we talk about implementing and aligning your investments, how does asset allocation come into play?

Harshil:

I will be honest; we cannot predict the future. No one can. But that does not mean we should not be prepared for what comes next. Preparation depends on a lot of factors. It depends on your age, your character, your goals, your financial condition stuff like that…The level of preparation required for someone who is young will be very different for someone who is close to retirement. Asset allocation is a way of preparing for what can come next. It goes hand in hand with your plan. A plan gives you the direction you need to take to achieve your goals and asset allocation is like the car in which you travel that helps you reach your destination.

Namratha:

So, what should be the right mix of asset classes in the portfolio?

Harshil:

See the idea is to balance risk. And the risk is different in each market condition. Sometimes equity is better, sometimes debt is better. Sometimes holding cash by itself is better. For each of these asset classes, there are different expected returns based on that risk. The percentage of each of these assets that make up your total portfolio should be based on personal goals, time frame, liquidity needs and risk tolerance, which is again dynamic in nature. It changes over time. Hence the right mix should also change over time in a way that provides the portfolio with both the possibility and sustainability of growth.

I have understood asset allocation. But what needs to be done?

Namratha: This is where sphere comes in. Let us talk a little bit about sphere and how the fund is being managed

Harshil:

Sphere is a one-of-a-kind multi-asset product. Sphere does exactly about what we have spoken. Solving the problem of right asset allocation at the right time. The strategy we follow is bespoke and is aligned with your risk profile. The fund can invest across multiple asset classes with no cap on a particular asset class. This gives the flexibility to take advantage of any given market condition. We follow a 360-degree process-driven approach towards investing which focuses on all aspects and is much superior to any dynamic asset allocation product. We are a house that is built on constant research.

Sphere by virtue, is a product that is heavily backed by research. Sphere focuses on a top-down approach to investing. This is a unique feature as a lot of PMS products do not do this. Ithought’s research has more than a decade of experience in macroeconomic calls. Sphere leverages this extensive research expertise. We identify opportunities based on global macro trends and gradually start building positions. The objective of the fund is to grow, sustain and preserve wealth. Another important objective is risk management. We use the concept of asset allocation, the margin of safety, hedges and liquidity management for managing risk. As and when macroeconomics dictate, we would re-balance the portfolio asset allocation to take advantage of the prevailing scenario. This is how we are able to effectively take advantage of a market crisis and reap the rewards when it stabilizes.

Namratha:

Now I know you will not be able to disclose the holdings but what does the portfolio currently look like.

Harshil:

Sphere was launched in mid-December 2021 and since then the markets have given us a lot of opportunities to invest in fundamentally strong ideas. Our philosophy in sphere is to buy stable businesses that are market leaders at reasonable valuations. Currently, we are 60% invested in equity, 15% in commodities and the balance in cash.

Namratha: Who can invest in Sphere

Harshil: Sphere is meant for someone who is goal-driven and for someone who is looking to sustain wealth creation.

Namratha: Well, that covers most of the answers I was looking for. To quickly summarise:

          • A plan is a success only if it is implemented.
          • We need to align our investments based on the financial goals
          • Our portfolio should have the right asset allocation since asset allocation is an important strategy that can help you to balance risk and reward within your portfolio by helping you determine how much to hold in different asset classes
          • As mentioned by Harshil, ithought Sphere PMS is a multi-asset class product that is designed for goal-driven investors who are seeking superior risk management & sustainable wealth creation.
          • It is the synonym for 360 Degree investing as the objective is to invest across multiple asset classes and provide a holistic investment structure to every client’s portfolio.
          • Sphere is well suited for investors seeking dynamic asset allocation and follows a macroeconomic approach to investing.
          • So, bring your financial plan to action by investing right.

That is it from us today. Thank you Harshil for sharing these insights. If you enjoyed listening to this episode, please share it with your friends! If you would like to know more about Sphere, please reach out to our team. Thanks for tuning in, see you next month.

Recent Posts

Achieving Scale

Posted on September 3, 2022

Opportunity in Uncertainty

Posted on August 27, 2022
Open chat