Capitalmind Launches Flexi Cap Fund: How Quantitative Investing Can Help You Reach Your Goals

ELI5/TLDR

Capitalmind is launching its first mutual fund, a flexi cap that picks stocks by the numbers rather than by gut feeling. Instead of studying individual companies one by one, it scores every stock on traits like price trend, cheapness, and quality, then buys the ones that rank highest — mostly on “momentum,” meaning stocks already going up. Around this product pitch, the three hosts spend most of the conversation on bigger questions: why India’s economy feels different right now, why no company stays great forever, and what money is actually for. It’s part investment philosophy, part fund advertisement.

The Full Story

The video is a long, rambling three-way conversation — Deepak Shenoy and Anoop (Capitalmind) with a third host, Shray — ostensibly to launch the Capitalmind Flexi Cap fund. The actual fund pitch is maybe a fifth of the runtime. The rest is a tour through how they think about investing, the economy, and money itself.

What “quantitative investing” actually means

The fund is, in Anoop’s words, “quantitative at its core with humans in the loop.” That phrase usually gets blank stares, so he reaches for a Formula 1 analogy. Suppose you want to pick the best driver for next season. The lazy way is to go by reputation — pick the famous name. The quantitative way is to ask what makes a good driver: reaction time, tire management, defending position, skill in wet weather. You break the driver into measurable traits, then pick whoever scores highest on the ones that matter for the race ahead.

Factor investing is really about breaking it down into the component aspects and then finding the drivers that fit with those in an investing context.

Translated to stocks: instead of looking at company names, you score every company on traits — quality, value, volatility, momentum — and buy the ones that rank high on whichever traits you’ve decided to bet on. These traits are the “factors.” You can stack them too: only stocks that pass a minimum quality bar and score high on momentum, say.

The “human in the loop” part is the safety valve. Data doesn’t know that a company is about to be acquired, or that ownership is changing, or that there’s a quiet governance problem. A person stays in the loop to catch what the numbers miss.

Why momentum, not value

The most pointed question in the video: value investing sounds great — buy cheap stocks before everyone notices — so why has Capitalmind anchored on momentum instead? Anoop’s answer is blunt: quantitative investing “looks at the world as it is, not as it should be.” When you run the Indian data back to the early 2000s, momentum has beaten every other factor, “not even close.”

Value has had very long periods of underperforming… you’d be better off investing in just the Nifty than in a value-based factor strategy for long periods of time over the past decade and a half.

Momentum — buying what’s already rising — also held up best on rolling three- and five-year windows, with drawdowns no worse than the broad market. The catch he’s honest about: momentum has underperformed over the last couple of years, and sitting through a slump is psychologically brutal. So the flexi cap keeps momentum as the core but adds a layer: when momentum is weak, it pivots to other factors (low volatility, quality, value); in genuinely bad markets, it hedges and pulls money out of equities entirely. The tradeoff they flag clearly — this means a lot more buying and selling (high “churn”) than a buy-and-hold fund.

A few investment beliefs, stated plainly

Deepak offers two principles that are worth more than the fund pitch.

The first is about false precision. He tells a telescope story: aim at a distant galaxy, nudge the scope by one degree, and you’re now pointed at a completely different galaxy millions of light years away. Small errors in your starting assumptions explode over distance. The same is true of ten-year financial forecasts built on exact numbers for growth and profitability. So Capitalmind deliberately works in ranges of likely outcomes rather than single-point predictions — they prefer bets where the whole range of outcomes feels comfortable.

The second is that perception, not just earnings, drives returns. He cites a Capitalmind analysis of stocks that rose 10x between 2012 and 2022:

Only 25% of that move was explained by their increase in earnings… more than 75% of that increase was attributable to the change in the price-to-earnings ratio.

The price-to-earnings ratio is just a measure of how much the market is willing to pay for each rupee of profit — in other words, how it feels about a stock. So most of a decade’s returns came from the market changing its mind, not from companies actually earning more. A mediocre company perceived as the next big thing can soar; a genuinely good company can go nowhere if sentiment sours.

No company stays great forever

A recurring theme: don’t fall in love with a stock, because “the stock does not know you own it.” Anoop walks through the US “Nifty Fifty” of the 1960s — Kodak, Polaroid, Gillette, McDonald’s — blue chips so dominant they were called “one-decision stocks”: buy and never think about selling. Over the next 15–20 years they underperformed the S&P 500. Some, like Kodak and Polaroid, went bankrupt as their industries vanished.

Deepak adds Nokia: in 2007 its CEO was on the cover of Forbes under the headline “Can Anyone Catch the Mobile King?” That cover date turned out to be the peak of Nokia’s stock price — the iPhone shipped about a year later. (Cue a joke about back-testing Forbes covers as a sell signal.) In India the same churn happens, just slower and quieter: the biggest retailer, telecom, and airline today are mostly not who they were a decade or two ago, and a large share of the Nifty 500 didn’t exist as listed companies twenty years back.

The India optimism, examined

The longest tangent is whether India’s economic confidence is justified or just people extrapolating a good decade. Deepak’s case for “real”: India is the fastest-growing large economy, starting from a low base (per-capita GDP under $3,000 vs $10,000+ for developed economies), which leaves enormous room to climb the consumption ladder — from “is the internet worth it” to travel, dining, ACs, cars. It’s a consumption-led economy, not export-led like China. Listed corporate profits grew ~15% a year over the past decade — faster than the ~10% nominal GDP growth — while companies paid down debt and the government borrowed relatively less. A young population (average age ~28) means rising incomes and rising spending ahead.

Anoop’s personal data point: of his old management-consulting cohort, the people who stayed in India and Asia became partners and moved up fast, while equally talented peers in Europe and the US “just about made it partner or might still not be” — because advancement tracks how fast the firm itself is growing. The host’s mirror image: friends abroad earn well but feel quiet “anxiety or despair” about their investment prospects, then ask if they can invest in India.

The illustrative cultural marker: Coldplay setting a 21st-century concert-attendance record in Ahmedabad — two lakh people over a weekend, at not-cheap ticket prices — something nobody would have predicted ten years ago. Evidence that a critical mass of Indians now has discretionary money to spend.

What money is for

Wrapped around all of this is a softer thread. Anoop’s definition of financial success isn’t flashy cars or vacation selfies — it’s being able to go to Lord’s to watch an India–England test match without worrying about the cost. Deepak’s is about removing anxiety: he built a tool to plan for his kids’ college fees, and the value wasn’t hitting the number early but knowing he was on track, which freed him to spend on the present. The host’s is skiing — a hobby he stumbled into and now does yearly, something money quietly enabled. The shared point: wealth as a number means nothing; wealth as the thing that removes a specific fear or unlocks a specific experience is what matters.

Key Takeaways

Factor investing scores every stock on measurable traits (quality, value, volatility, momentum) and buys the top-rankers on chosen factors, instead of researching companies one by one.
“Human in the loop” means a person overrides the model for things data can’t see: pending acquisitions, ownership changes, governance red flags.
In Indian data since the early 2000s, momentum has beaten every other factor decisively; value underperformed even the plain Nifty index for long stretches.
Momentum’s weakness is psychological — it underperformed the last ~2 years — so the fund pivots to other factors when momentum is weak and hedges/exits equities in bad markets, at the cost of much higher churn.
Avoid false precision: small errors in long-term assumptions compound enormously (the one-degree telescope shift), so Capitalmind works in ranges of outcomes, not point forecasts.
Perception drives most returns: in 10x stocks from 2012–2022, ~75% of the gain came from a rising P/E ratio (sentiment), only ~25% from actual earnings growth.
No company stays great forever: the US Nifty Fifty underperformed the S&P over 15–20 years; Nokia’s Forbes cover marked its peak. “The stock does not know you own it.”
India bull case: low per-capita base, consumption-led growth, ~15% annual listed-corporate profit growth, deleveraging companies, young population — but the speakers admit they may just be extrapolating.
The fund is a flexi cap benchmarked to the Nifty 500, fluid across market caps and sectors, designed to outperform only over the long term.
Wealth’s purpose is removing a specific fear or enabling a specific experience, not the headline number.

Claude’s Take

This is a fund advertisement wearing the clothes of a philosophy podcast, and it’s worth being clear-eyed about which parts are which. The product pitch is honest where it counts — they openly admit momentum has been losing lately, that the fund will churn heavily, and that results only show up over the long term. That candor is genuinely better than most NFO marketing, which buries the caveats.

But the analytical content is uneven. The strongest, most transferable ideas are Deepak’s two beliefs — false precision and the perception-vs-earnings split — and the “no company stays great forever” examples, which are vivid and correct. The momentum-beats-value claim is presented as settled fact backed by “the data,” but it’s their data, their back-test, and momentum’s recent underperformance is exactly the kind of thing that makes single-strategy back-tests suspicious. They acknowledge this obliquely and then sell the fund anyway.

The India-optimism section is the weakest as analysis — it’s a wall of bullish anecdotes (Coldplay, the consulting cohort, friends abroad) with one genuinely useful structural fact (15% profit growth, deleveraging, low government debt). To their credit, the host repeatedly flags that they might just be linear thinkers extrapolating a good decade. Nobody resolves that tension; they just move on to the pitch.

A 6: clear explanations of factor investing, a couple of durable mental models, refreshing honesty about the fund’s weaknesses — dragged down by being fundamentally promotional and leaning on self-serving back-test claims. Watch it for the telescope and perception ideas, discount the rest as marketing.