Asset Management Consulting

Past Performance Does Not Guarantee Future Results: (But It Usually Does). Despite the standard disclaimer that “past performance does not guarantee future results,” empirical data suggests that when evaluating private equity and private credit funds, past performance is indeed indicative of future results. Research by a leading investment consultant and a top-tier private markets data provider shows top-quartile managers tend to deliver strong performance in subsequent funds, especially when the observed manager has demonstrated such results in consecutive fund vintages. One study analyzing over 1,400 fund families found that top-quartile results are highly repeatable, particularly when they have demonstrated this track record over a six-year period that include 2 successive fund vintages. Another analysis of more than 1,700 funds confirmed that top-quartile managers consistently outperform their mean peers in subsequent vintages. This persistence isn’t coincidence. It reflects institutional advantages: experienced and highly motivated investment teams, repeatable investment processes, disciplined underwriting and structuring expertise, economic alignment, and proprietary deal sourcing networks. These strengths create structural edge, and that edge compounds generating alpha and absolute returns that consistently outperforms relevant benchmarks across market cycles. Sophisticated allocators and investment consultants evaluate performance holistically, assessing not just IRR, but also MOIC and DPI, which I call the tri-vector of investment performance. While a firm’s infrastructure, risk management, culture, are all important, the three dimensions of performance (IRR, MOIC, DPI) will always represent the cornerstone by which investment managers are measured. The Investment Advisors Act of 1940 requires that performance advertising by registered investment advisors (PE and PC operating in the U.S.) included relevant disclosure and disclaimers when marketing fund offerings, most sophisticated investors rely on historical performance for a reason. While there are no guarantees in life beyond death and taxes, when it comes to manager selection, track record matters. I believe that the strongest predictor of future outperformance is an alternative asset manager with all the requisite skills who has consistently done it before.

Manager Selection: The Hidden Alpha Engine “It’s not just the strategy. It’s who’s driving the car.” We obsess over strategies: macro vs long/short, private equity vs credit. But in alternatives, it’s often not what you buy—it’s who you back. Top-quartile managers can outperform by thousands of basis points. And yet, due diligence often gets treated like a checkbox. I’ve seen funds with dazzling decks and nothing under the hood. And I’ve seen quieter managers with airtight process, discipline, and skin in the game deliver decade-long outperformance. Manager selection isn’t always glamorous. But it’s your real edge. Don’t chase alpha. Allocate to it. #bealternative So how do you identify the right managers—and avoid the wrong ones? Here are five actionable principles backed by Hedge Fund Due Diligence, Due Diligence and Risk Assessment of an Alternative Investment Fund, and Private Equity Compliance: 1. Prioritize Behavioral Red Flags Over Marketing Shine Most blowups stem from behavioral warning signs—not poor returns. – Be alert to evasive answers, overpromising, and CV inconsistencies. – If the manager can’t clearly explain their worst drawdown, walk away. Operational risk often wears a smile. 2. Use a Layered Due Diligence Framework – Investment: strategy clarity, mandate discipline, leverage use. – Operational: NAV policies, service providers, valuation controls. – Manager: track record, co-investment, legal history. A strong fund passes all three layers—not just the first. 3. Move Beyond the Checklist Mentality – Ask how—not just what. – Request audit letters, compliance manuals, fund org charts. – Evaluate how quickly and how clearly information is shared. It’s not what’s disclosed. It’s how it’s delivered. 4. Re-underwrite Annually—Not Just at Allocation Diligence doesn’t stop once the subscription agreement is signed. – Monitor for style drift, team turnover, and audit delays. – Build an annual risk scorecard: manager alignment, NAV consistency, valuation transparency. Great managers stay great when they’re held accountable. 5. Investigate the “Why” Behind the Performance Outperformance isn’t always repeatable—but process is. – Ask: “What edge do you believe is durable?” – Review decision-making consistency, not just returns. – Confirm fee alignment, risk-adjusted mindset, and long-term incentive structure. Strong governance and repeatable process beat personality and narrative—every time. Alpha doesn’t live in the deck. It lives in the decisions behind it. What’s your non-negotiable when assessing a manager beyond performance? #bealternative

The Process I Use to Find Comparable Companies for Valuation Over the years, I realised something quite simple. A good comp set is never an accident. It reflects how clearly you have understood the business in front of you. Whenever I teach valuation, this is one of the first habits I try to build in students. Slow the mind a bit. Think before you search. Let the comp set come from logic, not luck. This is the exact process I follow in real work and in the classroom. 1. Start with the company’s business model - Before touching any database, pause and write three quick lines. - What does the company really sell. - How does the cash actually come in. - Who pays for it and why. Once this is clear, half the irrelevant peers will automatically fall away. 2. Break the company into revenue engines Most companies earn through two or three different engines.Write each one down. - Products - Services - Projects - Recurring contracts Then ask which listed companies earn money in the same manner. You get small peer clusters that later become your core comp set. 3. Use geography as a careful filter Pull global peers first. Do not restrict yourself early. Then narrow the list. - Compare cost structures - Compare customer behaviour - Compare market maturity You will notice some regions behave more like your target company than others. 4. Build the long list before cleaning it Aim for twenty to thirty companies. Practical steps: - Use sector keywords on Capital IQ - Add product category keywords - Add revenue model keywords At this stage, you are only mapping the universe. No judgement yet. 5. Clean the long list using financial checks Now remove the noisy ones. - Check three year revenue trend - Check three year EBITDA trend - Check segment mix for unrelated activities - Check for one time shocks or restructuring If the story looks inconsistent, drop it. 6. Match scale and growth - Sort the list by revenue, EBITDA and growth. - Keep companies that fall within a sensible band of your target. - Small companies behave differently from giants, and the multiples will show it. 7. Rebuild the final comp set using valuation logic Now check the economics. - Compare margins - Compare capital intensity - Compare revenue mix Keep the companies whose numbers move in the same pattern as your target business. 8. Document your reasoning for every peer - Write one line for each final peer. Just a small justification. - This step builds defensibility. - It also makes you sound far more confident in interviews because you know exactly why each name is on your list. Your comp sets become cleaner, and your multiples start telling a story rather than confusing you. Follow Pratik S for Investment Banking Careers and Education. Next Live Batch starts from Dec 14th. Early Bird till Dec 7th. Dr. Bhumi Wizenius - Be Deal Ready

Why do investors find it harder to sit still than to be wrong — and what does that reveal about the real challenge of investing? Do panic and boredom destroy more wealth than recessions? In theory, investing is simple: buy quality, diversify, and wait. In practice, it is emotionally excruciating. Markets test not intelligence but temperament. Many investors would rather be wrong doing something than right doing nothing. This paradox — action over wisdom — explains why average investor returns consistently lag the very markets they invest in. This essay argues that investors find it harder to sit still than to be wrong because the true challenge of investing is psychological, not analytical. Panic and boredom — the twin impulses of fear and restlessness — destroy more wealth than economic downturns ever could. The data show that the market’s greatest enemy is not volatility, but the investor’s own impatience. 1. The Myth of Activity The modern investor lives under the tyranny of information. Real-time prices, punditry, and algorithmic alerts simulate urgency even where none exists. The illusion of control seduces investors into action: “If I move, I matter.” Yet, as economist Charles Ellis wrote, “In investing, activity is almost always in surplus.” The Dalbar Quantitative Analysis of Investor Behaviour (2023) found that over 30 years, the average U.S. equity investor earned 1.7% less per year than the S&P 500, not because of fees or recessions, but because they bought high and sold low. This gap — “the behaviour penalty” — quantifies the cost of impatience. Investors crave movement because doing nothing feels like negligence. But markets reward the disciplined observer, not the restless participant. 2. The Psychology of Motion Behavioural finance explains why stillness feels intolerable. Action bias: Humans evolved to survive through movement. In danger, we flee or fight. In markets, we refresh and trade. Loss aversion: Kahneman and Tversky showed that losses hurt twice as much as equivalent gains please. Watching prices fall without acting feels like dereliction. Overconfidence: Investors systematically overrate their ability to time markets. They mistake volatility for opportunity and patience for passivity. Thus, to “sit still” violates our evolutionary wiring. Doing nothing feels psychologically riskier than doing something wrong. As Keynes warned, “It is the duty of the long-term investor to suffer the unpopularity of doing nothing.” 3. Panic: The Sudden Destroyer Panic is impatience weaponised by fear. During selloffs, investors’ time horizons collapse from decades to days. Morgan Housel notes in The Psychology of Money that “people don’t get what they want from markets; they get what they deserve.” The patient investor deserves compounding; the panicked one deserves regret. The real catastrophe, then, is not macroeconomic — it is behavioural.

Here is a quick analysis of mine on both the equity & the fixed income market in March 2024. (Only for educational purposes) https://lnkd.in/dk4EzRaB The video encapsulates : ➡️Current state of equity markets ➡️Forward trailing P/E & P/B for Nifty 50, Nifty Bank & comparison against past averages. ➡️Fundamental analysis on sectors. ➡️View on multiple sector valuations & how to analyse on your own. ➡️View on European, USA, Japan, China, India & other emerging markets. ➡️Soft landing in USA. ➡️Rising, inverted & flattening yield curve. ➡️Discussion on yield curve for USA V/S India ➡️Current Bull steepening yield curve. ➡️Yield spread & corporate spread. ➡️Discussion on duration management strategies through long duration & short duration bonds. ➡️Further discussion on intermediate credit, MBS, Pass-through agency loans & crossover credit in Europe. ➡️Duration neutral strategy. ➡️Mid & small cap stress testing. ➡️Discussion on GDP V/S GVA #investmentbanking #indianeconomy #useconomy #chineseeconomy #japanesemarket #europeanmarkets #equitymarkets #fixedincome #gdpgrowth #valuation #yieldcurve Anil Ghelani, CFA Peeyush Chitlangia, CFA Kirtan A Shah Devan Bhalla Preeti Parashar Pawan Khatri, CFA Kartik Rajpara Mihir Dedhiya, CFA, CA

Capital markets in Europe are signalling a structural pivot. IPO volumes rebounded sharply in 2024, rising nearly 80% year-on-year, yet still sit roughly one-third below the 2017–2019 average. The chart below illustrates this inflection point: IPO activity (light blue) is regaining ground, while Accelerated Bookbuild Offerings (ABOs) have normalised, reflecting resilient secondary market liquidity. This divergence highlights a bifurcated market—issuers are growing more confident, but investors remain selective, pricing risk with greater discipline. Looking ahead to 2025, the equity issuance calendar appears robust, supported by narrowing IPO discounts and renewed sponsor-led activity, with private equity-driven ECM rising nearly 50% last year. Equity risk premia are compressing as macro volatility recedes, and with follow-on activity already breaching $1 billion+ deal thresholds, the pipeline is building. We should expect a sequential acceleration in IPO volumes, with the UK poised for a late-cycle catch-up as political headwinds dissipate. The equity markets are open - the question isn’t if issuance will normalise, but how fast.

Most of us are familiar with the functional divide:. Trading is short-term and reactive. Investing is long-term and conviction-led.  But underneath lies a less discussed force: IDENTITY! And it colours every decision being made. Studies in behavioural finance, from Kahneman’s "Thinking, Fast and Slow" to Meir Statman’s research on "investor behaviour", show that financial decisions often stem not from logic, but from the need for self-consistency.  We act on what fits the image we hold of ourselves. Traders celebrated for precision sometimes cling to losses to dodge the stigma of a mistake. An investor may watch fundamentals rot, clinging to the narrative that once made sense. In both cases, identity overrides adaptability. Dalio, Druckenmiller, even Buffet have all spoken about the danger of ego in market decisions.  Yet we rarely acknowledge that ego often enters through the backdoor of strategy. Great capital allocators aren’t married to trading or investing. They adapt because they’re clear on what they serve:  Capital, Not ego. Make your identity your method, and you cage yourself. Remember, survival belongs to those who evolve with humility, and without hesitation. #KamalKiSoch #BehavioralFinance #InvestorMindset #TradingPsychology #RayDalio #WarrenBuffett #StanleyDruckenmiller #FinancialWisdom #CapitalAllocation #MarketPsychology #Adaptability #InvestmentStrategy #EgoInMarket #MindfulInvesting #FinancialDecisionMaking #ValueInvesting Kamal Matta Assetian Alka Jain Parul Verma Sumit Sanyal

📊 FinSharpe just put together a comprehensive research paper on Indian Capital Markets Data Infrastructure. The research covers everything from: → How the NSE/BSE data licensing chain really works - ADVs, brokers, aggregators. → Every data type across Equities, F&O, Fixed Income, MFs & Macro economics. → The full vendor ecosystem (NSE, Bloomberg to Screener, Moneycontrol) with actual price analysis. → What institutional investors had that retail didn't (and what's changed). → Deep analysis of every major Indian analytics app like Screener, Opstra, Trendlyne, Tijori, StockEdge etc. → The gaps and the business opportunity hiding in plain sight. 📍114 pages. 📍24 sections. 📍3000 lines. ✅ One document. Clean, high quality and comprehensive input data forms the bedrock for any AI + Finance platform. Sabir Jana, CFA FinSharpe

Private Equity’s growing interest in Professional Services businesses is understandable, given their cash generation, growth potential, and recurring revenue streams. With competition for assets driving valuations to all-time highs, these firms are undeniably attractive investments. However, many investors in recent times have underestimated the complexities that underpin their success and fail to grasp the fundamentals of how these businesses operate, leading to repeated missteps. One common mistake lies in unrealistic expectations around hiring. Investors’ theses often rely on quickly onboarding large numbers of new Partners and achieving immediate profitability. The reality, however, is far more complex. Transferring client relationships at scale is rarely straightforward, and it can take up to two years for a new Partner to fully embed and begin generating consistent revenue. This “talent lag” is frequently underestimated, as is the impact of non-compete clauses, which can create further delays. Another frequent oversight is the failure to assess the operational backbone of a Professional Services firm. The most successful firms excel in areas such as thought leadership, recruitment strategies, cross-selling, and delivering repeatable offerings. These elements are critical to long-term success, yet many investors fail to appreciate or evaluate them effectively during due diligence, focusing instead on surface-level metrics. We also see many ex-tier 1 consulting Partners, now working in Private Equity, making assumptions about “best practices” based on their experiences at larger firms. However, these individuals often overlook the fact that running a Professional Services business requires a completely different skill set. Operational strategy, leadership, and managing the nuances of people-driven businesses demand a broader perspective than what is gained from delivering client work. Professional Services firms present significant opportunities for investors, but success requires a far deeper understanding of their unique dynamics. These are people-centric businesses and, as such, behave in an almost esoteric manner. Investors who truly grasp these nuances are best positioned to unlock the sector’s full potential.

This week we published an updated version of Capital Allocation: Results, Analysis, and Assessment. This is comprehensive study of how public companies in the U.S. spend money. We extend most of the analysis back to 1970, update the data through 2024, and discuss results for the first half of 2025 where practicable. We review capital allocation alternatives in detail, including a novel discussion of intangible investments, and offer a guide for thinking about the prospects for value creation. Looking at a more than a half-century of data reveals long-term trends, including the rise of intangible investments and share buybacks, and the fall of capital expenditures and dividends. We include a framework for assessing a company's capital allocation skills, which covers past behavior, calculating return on (incremental) invested capital, an evaluation of incentives, and five principles of effective capital allocation. Report available here: https://lnkd.in/euybNpuZ