Angel One CEO: Focus on Capturing Market Returns in a Low-Cost Way

Angel One AMC CEO Hemen Bhatia advises investors to focus on capturing market returns in a low-cost way and beating inflation, rather than relying on alpha, which is random. The company offers passive products and will launch smart beta products in the coming months. Investors can construct a passive-only portfolio with the ingredients provided by the company.

Angel One AMC CEO Hemen Bhatia is advocating for a shift in investment strategy, focusing on capturing market returns in a low-cost manner rather than chasing alpha. In an interview with Financial Express, Bhatia emphasized the importance of cost efficiency and reliability in beating inflation over time [1].

Bhatia promotes a core-satellite portfolio strategy, where the core is market returns and the satellite can include active funds, PMS, or stock picking. He argues that generating index-beating returns, or alpha, is random and not a reliable strategy for long-term investment. "Alpha has got the shelf life of an unrefrigerated fish," Bhatia said, advising investors to focus on capturing market returns in a low-cost way.

Angel One AMC is set to become the second passive-only asset management company after Zerodha. The company currently offers five funds across two asset classes—equity and fixed income—and plans to launch smart beta products in the coming months. Bhatia believes that fund houses offering both active and passive products may not fully highlight the benefits of passive products due to higher expense ratios. "You have to keep educating the investor why it is challenging to do stock picking," he said.

Investors can construct a passive-only portfolio using the ingredients provided by Angel One AMC. The company aims to offer all necessary passive products, ensuring investors have the tools to capture market returns efficiently.

References:
[1] https://www.financialexpress.com/market/focus-on-returns-in-low-cost-way-angel-one-ceo-3863350/