Both the co-managers have combined over 20 years experience at established financial services’ organizations. Each experience was critical in learning how to successfully manage capital. Ironically, a lot was ingrained in us by experiencing first-hand “what not to do” if one wants to maximize chance of long-term success. The co-managers met in New York in 2010 and after several months of deliberation and outside consultation, decided to manage listed Indian equities with a focus on doing “on the ground” due diligence. The goal was and will remain for the co-managers to compound capital sustainably higher than benchmark returns and to provide “real” Indian/EM market exposure to our esteemed clients globally.Traits of an ideal investor to optimize his/her long-term (minimum 5+ years) investment return in Metis India Opportunity Fund (MIOF):
1. Have a true long-term outlook and clear vision (MCM goal is to deliver 17% annualized USD return till 2030 when Indian economy will near $10t at an annualized return of 12%). Practically this means the desire and ability to hold on through largely unavoidable, temporary rough patches driven chiefly by sentiment.
2. Long-term conviction on India. To gain this conviction in sufficient dose would probably require hours of discussion with your managers (which we welcome) and hefty comparative country analysis but as a heuristic, especially at frequent times of panic about Indian story, internally as self-motivation your managers ask: Why not India? Why won’t a diverse, fastest growing/youngest population with affinity for technology, aspirational, and democratic country with a low base across industries grow to a middle-income or even developed country in our lifetime? Without having sustained long-term belief (as opposed to near term worries/gripes about multitude of issues, economic or usually non-economic in our experience) the ability to execute #1 optimally is lowered.
3.Being situational focused and not painting with a broad brush. One can have long-term belief in India yet not find enough value in the overall market. Thus, finding value in partnering with managers such as ourselves who are 100% focused on analyzing individual businesses and their competitive dynamics, leadership, and valuation. Understanding at a gut level that Indian markets, like most others, given its size and low base, there are no paucity of great businesses, run by shareholder friendly management-owners, and selling at least at reasonable value (we buy much cheaper).
4. Appreciate the process more than outcome for simple reason that we have numerous innings left and thus what is most important is the likelihood of future outperformance. We keep improving on our art of understanding and valuing businesses from a ground up approach to ensure 2030 goal is achieved.
5. Desire to give back in their own way and not fundamentally driven by accumulation of money for its own sake. This is more personal but we feel it’s important to mention in order to keep the right perspective as time & markets march on.
Gaurav Aggarwal, CFA, CIPM
Gaurav is the co-founder and co-portfolio manager of Metis India Opportunity Fund (MIOF). Prior to starting Metis in 2011, he was a senior analyst with portfolio management duties over $50 million in fund of fund assets at a leading regional investment bank (Global Investment House) in the Middle East. Prior to this, he was with Bay Harbour Management, a $1.2 billion distressed debt and equity hedge fund in New York City. He has also served as an analyst with Polen Capital Management, a $8 billion+ long-only firm with a very successful long-term track record. He received an M.S. in Accounting (specializing in Finance) and B.S. in Business Administration from the University of North Carolina at Chapel Hill. He has also passed all levels of the CPA exam. In 2017, he publicly committed to create an India charity corpus by initially allocating 10% of his annual share of earnings (net management and incentive fees) from fund management. This has been since raised to 25% from 2018.
Piyush is the co-founder and co-portfolio manager of Metis Opportunity Fund. Having spent time with Citigroup and Bombay Stock Exchange in India, he moved to United States in 2002, where he covered stocks within Business Services, Autos, Consumer Products and Financials with Sanford Bernstein, Longbow Research, and Avondale Partners, working in teams that received accolades by leading institutional research arbiters, including Institutional Investor (II) and Greenwich Associates. Piyush received an MBA from University of North Carolina at Chapel Hill, MS from MNNIT, and BS in Accounting from University of Allahabad.