Message from the Founder
Multi-Act’s (MA) founding in 1998 was in many ways the culmination of my journey of self-discovery as a passionate value investor after assuming the responsibility for managing my family’s financial assets since 1991. It is, therefore, a very different organization in its interaction with clients compared to the traditional way in which investment services are delivered today. Early on in my journey, I realized that traditional agency relationships with financial service providers could lend themselves to very unsatisfactory outcomes for families whose basic task is simply seeking to preserve and grow their financial wealth at above inflation (and risk) adjusted returns. This realization became more acute in 1998 when the Asian crisis and the incipient TMT bubble brought these agency problems to the forefront. MATI was set up in India as a “buy side” equity research provider with initially just three analysts as a possible solution to one family’s search for the “right” answer in navigating the capital markets.
I believe that the major problem today hindering families from realizing their simple task is the inherent clash between the structure of the financial services industry, the behavioral biases (both of clients and agents) juxtaposed against the actions of Central Banks. In their search for the “Holy Grail” of macro-economic stability, Central Banks have perversely fomented “booms and busts” and the saver/investor has eventually ended up as the “road kill”, especially since 2000.
Multi-Act has been designed, therefore, to help families address what I believe are the three major issues that families have in search of the really very simple task of preserving and growing their wealth on an inflation adjusted basis:
- I believe that we live in very challenging macro times and the financial and global monetary structures that investors have all become used to since WW II could be prone to unexpected adverse changes, especially for portfolios incorrectly positioned for the changes that will emerge over the next decade;
- Fiduciary relationships today are rare indeed and instead families are more likely to be dealing with agents (i.e. either brokers or investment managers) whose goals are often misaligned to the investors goals. Unfortunately, Caveat Emptor should more likely be the guiding principle for investors in their dealings with intermediaries;
- The plethora of strategies and investment structures available to savers and investors have fostered an unnecessarily short investment horizon by ensnaring families in a short term “performance derby”, which truly does not meet their original goals and objectives as saver and investors.
There is therefore a need for a greater interaction by investment service providers with clients through a variety of tools and aids to ensure that the investment process developed is a streamlined one where a family’s needs in the capital markets are completely and fully understood, the dilemmas that all investor face are consensually resolved, and portfolios are constructed through a process of both education and continual interaction rather than an agency relationship where “funds” are turned over to an agent; the agent does his/her own thing and the principal remains a mere observer.
Multi-Act’s basic premise is that it is as much the fiduciaries responsibility; as that of the families themselves, in educating investors about these three major issues and help them achieve their goals and preserve their wealth by navigating the capital markets through these challenging times.