Figuring out the right mantra to make money in the stock markets can be tricky for most rookie investors, unless they have the penchant for it like legendary investors Warren Buffett or Rakesh Jhunjhunwala.
For many Indians, trading on the bourses is riddled with confusion primarily because of a lack of credible information. Sumit Chanda, CEO of FinTech startup Monitree, had observed this time and again during his 17 years in the banking, financial services, and insurance industry.
It is common for retail investors to depend on advice from friends or relatives and ill-informed projections about a stock’s past performance before putting money into the equity market. Sumit decided to place a bet of his own: on an artificial intelligence-powered model ‘Jarvis Invest’ to eliminate the emotional aspect of investing and simplify the process of putting money into the stock market.
The Jarvis Invest app creates a profile for users based on their risk appetite, identifies investment opportunities, and helps them create a diversified portfolio, while ensuring maximised returns. The app also features an embedded risk management system.
Launched in December 2016, Mumbai-based Monitree aims to resolve the information asymmetry in retail investment, which has led many investors to shy away from investing in an otherwise thriving stock market.
Sumit and his tech partner Techstalwarts LLP are focused on streamlining equity investment practices in India and provide a sustainable model for the masses by leveraging technology.
Building an app for myriad risk profiles
Explaining how the Jarvis Invest team conceptualised the business model, Sumit says, “We noticed that there was no product/service that could give small investors the right guidance on equity investments. These facilities were only available for HNIs, where every market intermediary found their interest. But, retail investors never got such premium services.”
Behavioural and emotional biases, he notes, are two integral parts of investment management in India, and investors often get carried away by quick profits or losses.
“They don’t exactly understand when to book a particular trade as there is always a lower visibility on the future projections of any stock’s movement,” Sumit says. “This is where technology can play an important role. Investing can be made easier and stress-free by basing considerations about entry/exit and rebalancing a portfolio on AI-based informed decisions.”
The app regularly tracks the investments made by a user and sends concise and jargon-free reports to the investors about their investments’ performance.
Jarvis Invest also manages risks on the investments by alerting investors about the right time to book profits or exit a stock, and suggests changes during its periodic reviews. Investors can also enlist Jarvis Invest’s help in limiting their exposure to certain stocks.
To access Jarvis Invest’s services, users are first asked to fill out a questionnaire, so that the team can assess their risk profile. The team then helps users create a portfolio that best suits their needs. Lastly, they choose a broker to help them execute their deals.
“Once we get the inputs, we run them through a stringent risk assessment process, which ensures that no risky or unstable stocks can move up the system. The portfolios that we generate deliver optimum Sharpe and Sortino ratios,” Sumit says, referring to risk-adjusted parameters to assess portfolio returns.
“On top of that, we have a unique predictive analysis-based risk management system that ensures proper exit timings for all stock holdings and safeguarding the returns that the investor has already earned,” explains Sumit.
Jarvis Invest’s typical users range from novices, or those who have a limited understanding about the market to those who might know enough about equity investments, but prefer to refrain from the hassles of research or executions.
Cracking The Equity Code
The team’s decision to go with an AI-powered model was based on how the technology makes personalisation of recommendations efficient. “We believe in treating every customer exclusively as every client has a unique profile,” Sumit says. “We understand clients’ risk-taking ability, horizon and capacity to invest as well as the timing of entry. On the basis of all these factors, we conduct personalised research for the client and generate a unique portfolio.”
Sumit says the customised portfolios created by Jarvis Invest are different from the standard market practice of maintaining a model portfolio irrespective of the client’s profile. “This helps us to set and manage the expectations of the clients, while ensuring that they have a smoother portfolio journey with us.”
Guided by the objective to ‘Make India Invest Smartly’, Sumit and his team have taken great strides in their journey over the past few years. It’s now managing an active network of 200+ brokers across the country and eight large financial institutions. It clocked a gross merchandise value of Rs 20 crore in 2020-21.
But, the race to the top has its share of hurdles. “We initially struggled to acquire raw and live information for data crunching. Most of the information was either exclusive or was available at a very steep price,” Sumit recalls. However, Jarvis Invest acquired the required datasets to achieve the desired product output, and integrated its systems with some of the most prominent names in the broking and wealth management industry.
When the COVID-19 pandemic took the world by storm last year, Jarvis Invest was among the few businesses that managed to weather it. “We saw a surge in the number of new Demat accounts being opened during the period. The markets were unidirectional and in such markets knowing when to exit was the key for a successful portfolio. That is what we have been helping our customers with for over a year now. Last March, we had just launched our product for the public and we barely had any users. Today, we have more than 9,000 satisfied customers on our platform,” he adds.
Shedding light on what users can expect from Jarvis Invest in the future, Sumit says he and his team are looking to explore other asset classes and segments, while partnering with larger institutions to cater to niche customer segments. “We are also exploring opportunities to work closely with fund management institutions to offer services in both domestic and global markets,” he adds.
Jarvis Invest is among the 10 startups who are a part of the NSRCEL FinTech cohort — an initiative launched by ICICI Securities and Indian Institute of Management-Bangalore’s startup hub NS Raghavan Centre of Entrepreneurial Learning (NSRCEL).
The accelerator programme aims at nurturing early-stage FinTech startups by way of guidance by mentors through need assessment, one-on-one interactions and workshops. Apart from exclusive access to IIMB’s resources and industry connections, the participating startups will also be receiving funding support at the end of the programme.
