Founder's letter

Dear Investor,

This month’s market moves have been a useful reminder of how quickly stories can change, and how dangerous it is to build portfolios on stories alone. In this note I want to explain our current positioning and, more importantly, the philosophy behind it: we accept uncertainty as a given, we treat investor psychology as a structural force, and we try to build portfolios that benefit from volatility instead of being broken by it.

1. Tech correction and what we actually learned
   

   Recent weakness in large, established software and AI-linked names was driven by a simple but powerful narrative: “new AI challengers will permanently destroy the incumbents.” At the same time, global flows rotated into industrials, materials, utilities and income-oriented stocks, and gold remained firm as a perceived safe haven.
   
   

   My reading is more nuanced:

   • Many AI systems still rely on existing software, data, and security infrastructure to be usable at scale, so not all incumbents are losers.
   • The sell-off has reduced valuations in parts of tech without a corresponding collapse in long-term cashflow potential, turning some former “priced for perfection” names into more reasonable long-term holdings.
   • Industrials and utilities are benefiting from multi-year themes: spending on physical infrastructure, energy and digital infrastructure, defense, automation, and a structural surge in electricity demand.
     
     

   This is not a signal to abandon growth or to chase every new AI story. It is a signal to be selective: favour businesses with real cash flows, balance-sheet strength and the ability to incorporate AI into existing products, and be far more cautious with thinly capitalised, single-narrative “concept” names.
   
   

2. Policy shifts, tariffs and why we use scenarios
   

   Recent trade and tariff developments have generated plenty of headlines, but the actual changes so far have been incremental and some are revolutionary. Rather than betting on one precise policy path, we work with scenarios.
   
   

   For example:

   • If trade tensions or geopolitical stress escalate, oil prices are likely to spike, inflation expectations may move higher, and risk assets (especially in Europe and in oil-importing emerging markets like India) will come under pressure, while gold and some alternatives should benefit.
   • If tensions ease, oil prices should soften, inflation fears recede, and energy importers and cyclical assets should recover, even if gold gives back some gains.
     
     

   We do not claim to know which path will materialize. Our job is to ensure that the portfolio is not reliant on a single outcome and that no individual risk can sink the whole ship.
   
   

3. How we think about uncertainty and investor behaviour
   

   There are two uncomfortable truths we have to live with:

   1. Much of what matters most for markets—wars, elections, policy shifts, technological breakthroughs—is not forecastable with any useful precision.
   2. Investors, including professionals, are prone to recurrent psychological patterns: chasing winners, fleeing after losses, overreacting to vivid news, and attaching too much certainty to their own views.
      
      

   You can see these forces at work in the past month:

   • A sharp narrative swing from “AI will save everything” to “AI will destroy the existing winners.”
   • Herding out of tech and into perceived “safety,” even where fundamentals have not changed much.
   • Attempts to rationalize every intraday move with a new story, creating an illusion of understanding rather than actual insight.

   Instead of pretending we can eliminate uncertainty or our own biases, we design around them:

   • We assume that shocks will keep coming and that models will be wrong at the worst possible time.
   • We accept that we will sometimes feel uncomfortable—holding risk assets when headlines are bad, or trimming them when they are popular—and treat that discomfort as a feature, not a bug.
   • We use clear, predefined processes (for example, rebalancing ranges) to counteract our worst behavioral impulses.
     
     

4. Our current positioning and the “why” behind it
   

   Against this backdrop, our stance can be summarized as risk-on, quality-biased and diversification-driven.
   
   

   1. Equities: overweight, but barbelled
      • We prefer an overweight to equities, anchored in markets where growth and earnings remain resilient and where innovation and capital investment are strongest.
      • Within equities, we prefer a barbell:
        • On one side, high-quality, cash-rich compounders: established platforms in technology, industrials with long order books, utilities with regulated returns and large capex pipelines.
        • On the other side, smaller, carefully sized positions in higher-beta or emerging themes (for example, parts of the AI and semiconductor ecosystem, or selected emerging markets) that can provide upside convexity without threatening the whole portfolio.
          
          
   2. Fixed income: prefer quality over stretch
      • We prefer investment-grade credit over high yield because spreads in high yield are close to multi-year lows and offer limited compensation for shocks that are often underappreciated beforehand.
      • Government and government agency bonds remain an important stabilizer.
        
        
   3. Gold and other diversifiers: structural, not tactical
      • Gold has become the world’s largest reserve asset and remains supported by concerns over debt, currency debasement, de-dollarization and geopolitical risk.
      • For us, gold is not a short-term trade but a structural diversifier: an asset that tends to perform when other parts of the portfolio are under pressure.
      • We complement this with selective exposure to cash-generating assets that behave differently across inflation and policy regimes.
        
        

5. Key message

    

   The key message is straightforward: the goal is not to guess the next headline but to own a portfolio that survives and compounds across many headlines.

   Practically, that means:
   
   

   • Staying invested in a diversified, equity-led multi-asset portfolio rather than trying to jump in and out around every correction or geopolitical event.
   • Accepting that some positions will feel uncomfortable at times; the aim is not comfort in the short term, but resilience and sensible risk-taking in the long term.
   • Using periods of volatility to rebalance towards assets whose long-term case remains intact but whose prices have moved more than their fundamentals.
     
     

   My commitment to you is to keep applying this philosophy consistently: to respect uncertainty, to be honest about behavioral risks (including our own), and to express our views through robust, balanced portfolios rather than heroic forecasts.

   If you would like to discuss how this framework applies to your specific goals, constraints and risk tolerance, I would be glad to do that in detail.

Yours faithfully,
Ashish Mundada

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