I can basically summarize the entire subject of behavioral investing in the following one sentence. Human beings are biologically hard wired to make poor investment decisions.
Unfortunately, your fund manager is also guilty of making the same mistakes that many retail investors make. As a result, many investors get stuck with underperforming managers despite paying high active management fees.
Even sophisticated institutional investors, who collectively manage trillions of dollars and have entire teams dedicated to fund manager selection, end up with portfolios that underperform. Buffett recently stated the following in an annual report, “huge institutional investors, viewed as a group, have long underperformed the unsophisticated index-fund investor who simply sits tight for decades. A major reason has been fees: Many institutions pay substantial sums to consultants who, in turn recommend high-fee managers. And that is a fool’s game.”
As a potential limited partner in the Ashva Capital LP fund, I feel it’s my duty to help you identify negative behavior that can lead a fund manager to underperform. I’ve recently published a report titled the 5 Deadly Sins of Portfolio Management. You can read the full report here.
I’m a big believer in the ability of Indian equities to compound your wealth over time. However, to experience the joys of the compound effect you must find the right fund manager.
Ashva Capital Management LLC
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