Who Will the Race for Alpha – Fund Managers vs AI

PMS Bazaar recently organized an exciting webinar titled “Who Will the Race for Alpha – Fund Managers vs AI,” which featured Mr. Sankarsh Chanda, Founder & CEO, Savart.

The webinar blog covers insights from Mr. Chanda, which included expert insights on AI-powered investing, the Apart AI system with engines - Quant, Iris & Synapse and Savart’s Ad Astra Fund. He shared his views on data-first investing, emerging tech like quantum computing and space logistics via Stardour, investor psychology, SEBI regulations and the evolving role of AI in future investment practices.

Key aspects covered in this webinar blog are

Savart’s foundation in AI-driven investment research
How Apart AI operates through three powerful engines
The importance of data and the nature of market movements
Portfolio characteristics and Future Outlook
Future technologies shaping investments
Stardour and the mission to build space logistics infrastructure
Sankarsh’s non-traditional path to investments
Insights into investor psychology and regulatory evolution

Savart’s foundation in AI-driven investment research:

Sankarsh Chanda, founder of Savart, shared his insights into AI-driven portfolio management, highlighting the firm’s deep-rooted commitment to automation. Unlike trend-based adoption, Savart embedded AI at its core from the start, aiming to eliminate human bias and emotional decision-making in investment research.

He introduced Apart AI, Savart’s proprietary AI, launched in 2019, which forms the backbone of their unique “robo-research” system—far beyond traditional robo-advisory.

Apart AI operates through three powerful engines:

Quant: Processes quantitative data—P&L, balance sheets, and financial ratios.
Iris: Performs qualitative analysis, evaluating governance, ethics, and sentiment using diverse data sources.
Synapse: Manages and optimises client portfolios using insights from Quant and Iris.

Savart’s offerings span investment advisory, PMS, education, and tech-driven solutions for other institutions. Their flagship AdAstra Fund, a discretionary PMS launched after managing ₹4,500+ crores in advisory assets, is:

Sector and market-cap agnostic
Narrative-free (not restricted to value/growth/dividend)
Focused on consistent long-term performance

Investment Philosophy:

Strong emphasis on fundamental research, avoiding technical analysis and timing the market
Preference for businesses with a large margin of safety and significant upside
Real-time allocation adjustments via AI—not fixed stop-losses or target prices

To enhance decision-making, Antimatter, another AI layer, critiques past actions, identifies missteps, and fine-tunes future strategies. Notably, Savart’s system showed resilience during events like the COVID crash—underscoring the potential of truly AI-first investing.

The Importance of Data and the Nature of Market Movements

Mr. Chanda emphasized that while AI has its flaws, the low benchmark set by human fund management meant that even small optimizations yielded significant improvements. He stressed Savart's obsession with data, encompassing everything from electrification and highways to macro and microeconomic data. He clarified, "We are technically not even an AI-first company. I should say we are a data-first company."

He addressed a common query from clients about understanding the "why" behind system investments. He explained that the stock market is a complex adaptive system, where reasons and consequences are not always clear or linear. He asserted that it's a waste of time to attach reasons to every short-term market movement. Instead, Savart relies on its well-established, six-year-old system with a real-time track record. He acknowledged that while this might sound unsettling, even human fund managers often lack complete clarity on why certain market events occur. He concluded by saying that they aim to be humble in the markets, recognizing that there is much they don't know.

Portfolio Characteristics and Future Outlook

Mr. Chanda highlighted that the AdAstra fund maintains concentrated portfolio with single-digit churn and average holding periods of over three and a half to four years per security. They typically invest in no more than 13 to 15 stocks.

He revealed that currently, banks and healthcare sectors have a higher allocation in the AdAstra portfolio. He also noted that the system has identified niche businesses in sectors like engineering, infrastructure, and waste management, many of which exhibit monopolistic characteristics or are pioneers in their industries.

When asked about global economic trends influencing equity markets, Mr. Chanda candidly admitted that they do not make predictions. He offered the example of their system's action on January 2, 2020, when it prompted them to move 65% of client assets to cash across all portfolios, well before the COVID-19 market crash. He stated that their system analyzes extensive macro data in addition to security-level information, enabling it to adapt to unforeseen circumstances.

Future Technologies Shaping Investments

When asked about technologies poised to impact investment landscapes beyond AI, Mr. Chanda highlighted several areas that he found particularly exciting. He first mentioned quantum computing, expressing significant enthusiasm for its potential. He acknowledged the current lack of direct investment opportunities in quantum computing within the Indian listed market.

He then spoke about hydrogen-based propulsion and energy generation, noting that this is already a developing field with initiatives like the National Green Hydrogen Mission. Another area he identified as the "next big thing" was space tech, emphasizing that private sector involvement in space is no longer hypothetical but a current reality. Mr. Chanda candidly admitted his personal bias towards space tech and hydrogen, given his ownership of an aerospace engineering company actively working on hydrogen propulsion.

He then touched upon a "gray area" for him such as Electric Vehicles (EVs) and battery technologies, alongside cryptocurrency. He explained that they lacked clarity on whether EVs represent a sustainable shift or merely a transition phase between traditional fossil fuels and future alternatives like hydrogen.

StarDour: Building the Logistics for Space Exploration

Further elaborating on his aerospace venture, Mr. Chanda introduced his company, StarDour, which focuses on building orbital transfer vehicles. These spacecraft are designed to transport goods and payloads between different orbits, including Low Earth Orbit (LEO), Geostationary Orbit (GEO), and eventually to the Moon, Mars, and beyond. He clarified that, for now, they are focused on cargo and logistics rather than human transport.

He also proudly shared that StarDour is developing water propulsion technology, meaning their spacecraft are propelled by water as fuel. He mentioned significant progress has been made including successful engine fire tests and the development of substantial intellectual property in this area over the past couple of years.

A Non-Traditional Path to Investment

Mr. Chanda reflected on his unconventional entry into the investment world. He attributed his early interest to a love for reading, which naturally led him to investing. He humbly stated that he considers himself an "ordinary investor" with no extraordinary skills, which is precisely why Savart relies on Apart AI for investment decisions rather than his personal stock-picking abilities. He also revealed that he is a college dropout, finding traditional bachelor's studies "super boring" and disconnected from real-life applications, which prompted him to leave and pursue his true passions.

Navigating Psychological Pitfalls in Investing

Mr. Chanda delved into common psychological pitfalls observed among investors, citing a relevant question from the audience about AI's opaque decision-making process. He addressed the client's concern directly by saying that one can either be honest or simply lie. He explained that even if a human fund manager's stock pick turns out to be profitable, the actual reasons for its success might differ entirely from their initial assumptions. He stated that in the market, there are those who tell stories and those who are honest about their limitations. He firmly believes that knowing one's limitations is paramount, particularly regarding the unpredictable nature of short and medium-term market performance. He asserted that anyone claiming to have absolute clarity on these matters is likely misinformed.

Another psychological trap he highlighted was the demand for constant "action" from fund managers. He explained that many clients expect frequent trading, assuming it correlates with better performance or justification for fees. However, he stressed that inactivity can often be superior to unnecessary action, as constant trading can actually detract from returns.

Advice for Young Investors and Regulatory Evolution

Offering guidance to young and new investors, Mr. Chanda, while modestly claiming he's "still learning," emphasized the critical importance of experimentation. He noted that many new investors tend to "copy trades" without understanding the underlying research, often leading to speculation rather than genuine investment. He urged investors to differentiate between speculation and investment and to understand the distinction between pseudoscience and science in the market. His core advice was to objectively analyze data and experiment, as true understanding comes from personal experience rather than simply listening to others.

Regarding recent regulatory relaxations by SEBI for investment advisory, Mr. Chanda viewed this as a positive evolution. He stated that the regulatory environment is still in its early stages but anticipated a more evolved and welcoming framework in the coming years. He welcomed these changes as they foster fiduciary duties and professionalism within the industry.

When asked about integrating AI into advisory practices while maintaining compliance and client trust, he confidently stated that it is a matter of "when" not "if". He believes the future will see two categories of businesses: those enabled by technology and those whose core business is AI. While human touch will remain important for client support and relationship building, he asserted that technology is the path forward, and businesses must embrace it to thrive.

Mr. Chanda covered all the topics mentioned above in-depth and answered questions from the audience toward the end of the session. For more such insights on this webinar, watch the recording of this insightful session through the appended link below.