Time in market is better than market timing

As chief investment officer at Edelweiss Tokio Life Insurance, Bismillah Chowdhary oversees the company’s investments for various funds. He specializes in equities, derivatives and fixed income, leveraging his more than a decade’s experience in investments, trading and fund management.

Bismillah started out as a management trainee at Edelweiss Capital and was part of the entity for five years. Later he was assigned the task of setting up the investment desk of Edelweiss Tokio Life Insurance. Chowdhary has done his MMS from Mumbai University, CFA, FRM and general management programme from Harvard Business School.

Investment strategy

At Edelweiss Tokio Life Insurance, Chowdhary runs an extremely process driven investment desk. Each fund has a tailor-made strategy based on the fund objectives and the benchmark. The approach is to beat the benchmark consistently year-on-year rather than having extreme outperformance in one year and average performance for several years. To achieve this, every strategy used is rigorously back-tested to ensure that it meets the investment objectives consistently across market cycles and regimes.

A lot of effort is spent on getting the correct risk management framework in place to protect the funds against bad times. For other funds (with no benchmarks), the CIO uses strategies which give capital protection in bad times and significant participation in upside in good times. Strong attention is given to asset liability management to ensure that the funds are not affected by black swan events.

“We look for quality companies with good management, which have shown consistent growth.  We like companies which have the potential to become a market leader or have carved out a niche for themselves in the industry.”

“We try to assess a company’s future prospects based on a scrutiny of its financial statements and project its future earnings and estimated value. We do not mind buying them at a little bit premium if the quality of earnings, growth and management warrant the premium. Our hypotheses is that these will continue to trade at that valuation. We have always followed this strategy and it has worked out well almost every time,” says Chowdhary.