Level 1-5 Investing

The concept of Level 1-5 investing, helps explain what an investor
is truly investing in
when they build a portfolio of investment funds (MF, PMS,AIF).

Each level of Level 1-5 investing has it’s own relevance for an investor’s wealth creation journey, and taking the right decision at each of these levels is essential for investment success & wealth creation. We provide below some additional details on each of these levels, and their importance in your portfolio. 

Level 1 - Your Advisor / Wealth Manager

Most end investors, use an advisor/wealth manager to help them identify how their wealth is to be managed. Since advisors can often have a large impact on how funds are allocated, the correct choice of an advisor is an important decision for investors to make. 

Level 2 - Investment Vehicles/Funds (MF,PMS,AIF)

This is the level that is typically given the most amount of focus on, by end investors & wealth managers. This is an analysis of the specific funds that make up the investors portfolio. 

At IME Capital, our focus in on shifting investors focus away from Level 2 (fund) investing, and towards gaining an appreciation that focusing on
what is truly important for wealth creation - The Level 3-5 trends you wish to have exposures to.
Once this is understood, the right funds that give you exposures to these trends can be identified.

Level 3 - Underlying Investments (Equity Shares, Debt Securities, Real Estate etc.)

Any Level 2 Fund (MF, PMS, AIF), is ultimately nothing but a means for you to hire a professional fund manager, to build a portfolio of underlying investments for you (based on the mandate of their fund). A fund that holds equity shares gives you exposure to value creation of these businesses, a fund with debt securities gives you a certain safety of capital along with steady income generation, while other funds give you exposures to their specific portfolio of underlying securities. 

Level 4 - Economy

The performance of underlying investments are very dependent on the underlying growth of the economy that these investments are based in. Economic growth, that drives business growth, is ultimately a foundational factor of longer-term wealth creation. 

Level 5 - Trends

Every economy has certain underlying trends that are the core drivers of growth in that economy, and companies (Level 3 underlying investments) that are exposed to these growth trends tends to deliver disproportionate value creation. True wealth-creation and substantial outperformance is driven by having large allocations to specific trends that are driving wealth creation.