What is the Investment Philosophy that was followed with respect

to the two clients?

Two Investment Philosophies: Growth vs. Stability
The investment philosophies of two distinct clients: The Sharma
Family Office (SFO) and The Garv Bharati Pension Plan (GBPP).

1) The Sharma Family Office (SFO): Aggressive Growth

The SFO prioritizes maximizing their wealth over the long term.
They're comfortable with significant risk, understanding the potential
for higher returns comes with a bumpier ride. Their investment
strategy reflects this aggressive approach.
Key Points:
Goal: Maximize wealth in the long run.
Risk Tolerance: High. They embrace market volatility for potentially
bigger gains.
Investment Horizon: Long-term, with a 10-year checkpoint for
potential cash needs.
Investment Style: Focused, concentrating on a select group of
investments.
Growth Strategies:
Factor Investing: Choosing investments that have historically
performed well based on market trends.
High-Risk, High-Reward Stocks: Including some riskier stocks with
the chance for significant growth.
Tax-Minimizing Investments: Reducing taxes on their investments.
Adapting to Market Changes: Regularly monitoring and adjusting
investments as market conditions evolve.
2) The Garv Bharati Pension Plan (GBPP): Stability for Retirees
The GBPP manages a massive public pension fund, focusing on the
financial security of retirees. Their investment philosophy is
conservative, prioritizing safety over good returns.
Key Points :
Goal: Prioritize capital preservation to ensure stable, consistent
returns for future pension payments.
Risk Tolerance: Limited. Avoiding excessive risk to safeguard their
ability to meet pension obligations.
Investment Horizon: Long-term, but with a crucial difference. The
funds need to be readily available after a predetermined period for
pension payouts.
Investment Style: Risk-averse, focusing on low-volatility investments
with predictable returns.
Investment Strategies:
Low-Volatility Stocks: Considering stocks with historically stable
prices, even if the potential for high growth is limited.
Diversification: Spreading investments across various Sector to
further reduce risk.

In a Conclude note , The SFO and GBPP represent two

contrasting investment philosophies. The SFO prioritizes aggressive
growth, embracing risk for potentially high returns. The GBPP
prioritizes stability and capital preservation, focusing on predictable
returns to ensure they can meet their future pension
obligations. Ultimately, the right investment philosophy depends on
the specific goals, risk tolerance, and investment horizon of each
client.
Explain the Investment Objective for both the clients’ portfolios.
GBPP
• Capital preservation and constant returns:
Clients primary objective ios to preserve the capital with constant returns.

• No sustainable losses:
Clients cannot bear sustainable losses

• Fast recovery:
Client expects fast recovery with downside risk protection.

• Return above risk free rate:

Client expects to get returns exceeding to risk free rate of returns.

• Minimum negative return beyond 3 years:

Client expects that its portfolio has minimum negative return after 3 years.

• Diversification:
Clients’ portfolio should be diversified among different companies and
sectors.

SFO
• Aggressive capital growth
Client’s primary objective is to generate aggressive capital growth.

• Concentrated portfolio
The portfolio should be concentrated among very few companies and sector.

• Accepted max drawdown =60%

Client can accept maximum drawdown upto 60 %

• No negative outcome in 10 years

The portfolio should have no negative outcome in the years

• Diversified range of high risk- reward stocks

The portfolio should have a diversified range of high risk reward stocks which
helps the client to grow its portfolio aggressively
 • Tax efficiency:
The client falls within the highest tax slab therefore the portfolio tax
efficiency can be optimised to the fullest.

In summary the client’s aggressive portfolio is characterised by resilient risk appetite committed to
factor investing and foresighted approach to future liquidity needs combining this elements with the
dynamic strategy can contribute to the achievement of sustantial long term capital appreciation while
mitigating potential risk associated with market uncertainties.

Explain your team structure

Team structure
3 team members are analyst in our team
Analyst expert will find out the best possible factors and parameters according to favourable
outcomes for both the parties or clients.

1 team member is weightage expert.

To decide the weightage methodology and allocate appropriate weightage to different factors
and its parameters

1 is risk management expert

Risk management expert assess the potential risk associated with each single factors and
propose ways to mitigate them

Describe your decision making process

Firstly we all have discussed both the case study & find out the
objectives of both the clients. Then our analyst from the team
differentiated the most favourable factors & its parameters according
to the objectives. Then weighing methodology expert who is also
technical software operator decides the particular weightage for the
factors as well as parameter. After submitting the portfolio the risk
management expert assesses the portfolio with the decided
benchmark. In this process, expert’s major task is to find out the
potential risk associated with every single factor & propose ways to
mitigate them.
Benchmark Selection and Justi cation
Benchmark selection and justification
For the Garv Bharatiya pension plan we have selected the NIFTY DIVIDEND
OPPORTUNITIES 50 – TOTAL RETURN INDEX (TRI).Because of exceeding returns then
risk free returns and downside risk in the following index is also less.
Also, the companies that are part of this index are providing regular dividends and also it is
assumed that the companies that provide regular dividend has a positive net cashflow and
which also fulfills our objective and it will lead to not incur any sustainable loss.
Therefore this index is aligned with our Portfolio.

For Sharma Family Office we have selected the following index: NIFTY ALPHA 50 TOTAL
RETURN INDEX (TRI) Because the primary object of client is aggressive capital growth. In
the following index the companies that are part of this index generates higher alpha.
As in the following case the client needs higher returns for its portfolio and in this index the
companies that are part of this index have already outperformed their industry benchmark
that is why we think its the right index to compare out portfolio with the same index.
In both the clients we selected total return index (TRI) because as per regulatory body SEBI
made it mandatory to use the TRI as performance benchmark.

What was the period for back-testing selected by your team?

Explain the rationale behind the same.

For Garv Bhartiya Pension Plan we selected 01-01-2010 to 01-01-2024

In this portfolio we have targeting higher dividend yield companies .

During the 2007-08 bull run in infrastructure sector

Past few years from 2010 had seen a rally or bull run in infrastructure sector leading to a
skewed return on portfolio which also was restricted to a few companies.
At that time the valuation of these companies was such which happens only once in a lifetime
of company.

After 2010 the returns on every sector started to normalize again.

Therefore we think that the period of 2010 - 2024 is the best period for backtesting our
portfolio

For Sharma Family Office we selected 01-01-2007 to 01-01-2024

In this portfolio our primary objective is:
Excessive returns
There are 2 possibilities to get excessive returns
1) By beating the benchmark returns
OR
2) By beating the downside of benchmark.
(which means less drawdown then the benchmark )

So we think that we can accurately measure our portfolio performance in respect to the
benchmark and measure our returns in compare to the benchmark and generate the excessive
returns as desired by the client.

Hence, we think that the period of 2007 – 2024 is the best period for backtesting our portfolio
in the following case of Sharma Family Office.

Portfolio Construction Details

number of stocks selected for each portfolio.-

For SFO, we included 20 stocks because as per Client’s objective, Client needs concentred Portfolio

For GBPP, we included 50 stocks because client’s focus on diversification so long tail portfolio can
reduces the risk.

Rebalancing period

We selected six month rebalancing period for both the clients because It is an idle period for
rebalancing. Less than 6 months costs more, increasing tax and will not give enough time to portfolio
to generate profit. Also yearly rebalancing period cannot help to overcome within year market
changes.