In this episode of Connect With Purpose, Augusta Mirchandani (CEO & Founder, aaa global) sits down with Rishi Kohli, the CIO of JioBlackRock Mutual Fund, to explore the evolution of modern investment philosophy.

From his roots in a middle-class Indian household to leading complex investment strategies for global giants, Rishi discusses the shift from "gut feeling" to systematic, quant-driven logic.

This conversation serves as a masterclass for both institutional investors and those just beginning their financial journey, emphasising the balance between risk and reward and the critical need for financial literacy.

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How Do You Separate Signal From Noise In One Of

The World’s Most Dynamic Financial Landscapes? 

Key Insights From The Episode

Risk vs Reward Disparity:
In the early 2000s, the Indian market focused almost exclusively on returns, ignoring the critical necessity of risk management.

The Power Of Non-Correlation:
Strategies that don't move in lockstep with the market provide better outcomes when combined with traditional portfolios, though they are harder to explain to investors during flat periods.

Duration vs Magnitude:
For most investors, the length of time a portfolio stays in a "drawdown" (loss period) is more psychologically painful than the actual size of the loss.

Systematic Discipline:
Moving from discretionary "gut" trading to a rules-based systematic approach removes emotional bias and improves outcomes for Rishi's team.

Information Ratio (IR) Matters:
A fund that delivers 17% returns isn't necessarily better than one that delivers 16% if the risk taken to achieve it was significantly higher; IR is a truer measure of skill.

Financial Inclusion:
Success is measured not just by Assets Under Management (AUM), but by reaching first-time investors across the length and breadth of the country.

The Psychology Of Capital: From Middle-Class Roots To CIO

Rishi’s perspective on capital was forged long before he entered the trading floor.

Growing up in a middle-class Indian family, he learned the importance of savings, avoiding unnecessary debt, and being extremely conscious of spending. This upbringing fostered an automatic understanding and appreciation for risk versus reward that would define his later career.

When he started his career in 2001, he noticed a glaring gap: everyone talked about returns, but no one talked about risk. By combining his personal upbringing with professional observation, he realised the industry needed to move toward a more balanced appreciation of the "risk" aspect of money.

The Pivot: Discovering The Quant Frontier

Early in his career, Rishi initially aimed for a career in investment banking. However, a six-month rotation revealed that the traditional path didn't excite him.

Instead, he found his calling in the equity and public markets just as India was launching its derivatives markets. Between 2003 and 2007, despite India experiencing a massive bull run, the market suffered sharp "jerks", quick 20% to 30% crashes.

While star fund managers were left confused, Rishi began thinking about strategies and models that could thrive specifically during these crashes. This led to his pursuit of absolute return strategies and his move to the "buy side" to pioneer long-short quant funds.

Managing Uncertainty: Iran, Crude, And Common Sense

How does a quant leader handle extreme uncertainty? Rishi points to a recent example regarding the conflict in Iran. Instead of panicking or overhauling the model based on news, his team performs a "common sense" check:

  1. Identify Impact: Pinpoint sectors that will be affected by specific events, such as a crude oil spike.
  2. Verify Exposure: Check if those sectors are heavily weighted in the current portfolio.
  3. Logical Step-In: If exposure is minimal, let the model run; if it is significant, tighten constraints temporarily as an exception.

This disciplined approach ensures that "once in a blue moon" events are handled logically without letting every monthly news cycle disrupt the long-term strategy.

Purpose And Social Impact

Rishi views his work through the lens of social impact.

This includes his role in starting a non-profit quant association to mentor younger people in the industry. He also engages in impact investing, supporting startups focused on breast cancer detection, a cause close to his heart after losing his mother to the disease and lithium-ion battery recycling.

At JioBlackRock, the goal is to reach the "length and breadth" of India.

In just eight months, the firm has reached 1.1 million investors, 20% of whom are first-time mutual fund participants, furthering the mission of financial inclusion.

"To manage risk effectively, you don't need a crystal ball; you need a systematic process that removes the emotion from the execution."

Personal Discipline: The "No News" Rule

To survive a stressful industry, Rishi maintains strict personal boundaries. He follows a "no work on weekends" rule and avoids watching TV market news entirely.

By removing the "noise," he stays patient and protects his portfolio from emotional reactions.

He even credits his "afternoon naps" as a habit from his upbringing in Calcutta for keeping him energised and grounded.

Rishi’s Recommended Reading List

Fortune's Formula:
Explores the Kelly Criteria and how nature-based examples reflect risk and reward.


The Man Who Solved The Market: 
The story of Jim Simons and the most successful quant track record in history.


The Works Of Ed Thorp: 
Rishi calls him the "father of quant investing," specifically recommending Beat the Market and Beat the Dealer.

 

Listen to the full episode to hear more about Rishi's insights on navigating the evolution of Indian markets and the importance of a systematic investment mindset.

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