What is Grey Sky Capital?

An essay on the architecture of India's wealth management industry — and why we chose to build a different kind of firm.

The architecture of wealth management

Every rupee that moves from an Indian household into a financial product passes through an architecture. Most investors never see this architecture. They see a relationship manager, a recommendation, a portfolio. But behind every interaction is a chain of roles, incentives, and regulatory boundaries — and understanding this chain is the single most important thing an investor can do before handing over capital.

The chain has three primary actors.

The Manufacturer builds the investment product — the AMC constructing a mutual fund, the portfolio manager designing a PMS strategy, or the fund manager architecting an AIF. Their job is to define the investment universe, the decision framework, the risk parameters, and the fee structure.

The Advisor evaluates the investor's situation and recommends appropriate products. SEBI-registered Investment Advisers operate under fiduciary duty and are compensated directly by clients. There are fewer than 1,000 active RIAs in India — roughly one for every 76,500 investors.

The Distributor connects the manufacturer's product to the investor. They're compensated by the manufacturer through commissions, trail fees, or revenue-sharing. Their economic incentive is to maximise the volume and value of products sold.

In theory, this architecture is elegant. In practice, India's wealth management industry has collapsed these roles in ways that create profound misalignment.

Where the incentives break

When the distributor becomes the kingmaker

Consider how most investors encounter a PMS product. Not through independent research. Not via an RIA's recommendation. Through a relationship manager at a bank or wealth desk — someone compensated, directly or indirectly, by the manufacturer.

Of the 1,257 PMS strategies tracked as of December 2025 — across 332 firms — only 149 equity strategies outperformed the Nifty 50 TRI on a 1-year basis. That's just 15%. More than 85% of PMS strategies — managed by "professionals," charging premium fees — failed to beat a simple index over a single year. Yet the industry's AUM continued to grow. Money kept flowing in — not because investors chose to underperform, but because the distribution machine kept running regardless of results.

The AUM-Performance Disconnect
Largest PMS firms by AUM — returns tell a different story

India's largest PMS firm by equity AUM — managing over ₹37,000 crore — delivered a 1-year return of just 3.94%. Another firm with ₹17,500 crore delivered 0.44% over one year. A third with ₹16,600 crore actually lost money — delivering negative 3.75%. Yet another with ₹14,150 crore across 34 strategies saw its flagship return negative 5.82%. These aren't firms that rose on performance. They rose on distribution.

In India's PMS industry, AUM has almost no correlation with performance. The biggest are rarely the best. The best are rarely discovered.

When the advisor doesn't exist

The role that should correct this imbalance — the fiduciary advisor — is virtually absent at scale. India has over 1,33,000 registered mutual fund distributors. It has fewer than 1,000 active SEBI-registered investment advisers. Investors with ₹50 lakh, ₹1 crore, ₹5 crore in investable capital are making allocation decisions based on distributor recommendations, social media content, or peer influence — not fiduciary advice.

The architecture has a gaping hole where the advisor should be, and that hole has been filled by two inadequate substitutes: the commission-motivated distributor and the accountability-free finfluencer.

When the manufacturer becomes a department store

Over 1,250 SEBI-registered PMS strategies exist today across 332 firms. Walk into any large PMS house and you'll find 20 to 35 strategies — small-cap, mid-cap, flexi-cap, thematic, ESG, value, momentum. Different fund managers. Shifting house views. The product shelf expands not because each strategy fills a genuine gap, but because each gives a distributor a new talking point.

Conviction becomes impossible at this scale. When you have 34 products, you're not managing wealth. You're managing a retail operation.

Where we come in — and why we're built the way we are

Grey Sky Capital was founded in Bengaluru in 2025 as a SEBI-registered Portfolio Management Service. We are a manufacturer. But the way we approach manufacturing — and the way we've deliberately chosen not to approach everything else — is the product of having stared at this architecture long enough to know where it breaks.

Why manufacturing, specifically

Before Grey Sky Capital, both founders spent 18 years each in organisations that operated at scale — Navi Group, Deutsche Bank, Standard Chartered, Yahoo!, SigTuple. What we learned is a simple lesson: you should do what you are genuinely good at, and resist the temptation to do what you are not.

We are not built to run a 200-person distribution team. We don't have the temperament to manage a product shelf of 20 strategies across different fund managers with different philosophies. What we are good at is building things — studying a problem, designing a solution, testing it with rigour, and deploying it with conviction.

That is manufacturing. And so that is what we do. We build investment strategies. We don't distribute other people's strategies alongside our own. We occupy one node in the architecture — the manufacturing node — and we try to be excellent at it.

When you know your growth is a downstream consequence of your quality, you orient the entire company around quality.

Why data science — not discretion — is our foundation

The investment management industry in India runs overwhelmingly on human discretion. A fund manager studies companies, forms a view, builds conviction, allocates capital. When the view is right, it looks like genius. When it's wrong, the narrative shifts.

We chose a different path. Not because discretionary managers are unintelligent — many are deeply thoughtful — but because we believe conviction must have a foundation, and for us, that foundation is data.

We spent enough time in building systems where outcome quality was inseparable from data quality and process quality.

When we looked at the investment landscape, we saw an industry where conviction was often indistinguishable from opinion. A fund manager's "high conviction" pick is, structurally, indistinguishable from a guess — unless that conviction is grounded in a repeatable, testable, falsifiable framework.

Quantitative investing gives us this. Not the elimination of judgment — building the model requires enormous judgment — but the separation of judgment from execution. The judgment happens once, in the design. Once the framework is built and tested, execution is mechanical. The model doesn't panic. It doesn't get euphoric. It doesn't anchor to yesterday's narrative.

The Smart Core Portfolio — our first answer

If you understand the industry's architecture, our first product becomes self-evident.

Most PMS strategies do one thing: pick stocks. The portfolio is 100% equity, managed discretionarily. When markets correct 20-30%, the only "risk management" is the fund manager's temperament. There is no structural answer to drawdowns.

We looked at this gap and asked three questions:

First — is it true that public equity creates wealth unlike any other asset class? The data says yes.

Second — is there significant additional alpha in tactically allocating to gold and debt? The data says yes again. When deployed through a systematic framework, they actively contribute to returns while preserving capital during equity drawdowns.

Third — can this be done in a defined, well-tested framework, making it a repeatable process? This is the question that became Grey Sky Capital.

Smart Core is a multi-asset PMS with fully dynamic allocation ranges — 0% to 100% in equity, gold, or debt, with no fixed limits. The model evaluates each asset using composite scores blending momentum, trend persistence, volatility, and price strength. Allocation shifts are driven by quantitative signals and regime detection, not gut feeling.

We tested across every major market event from 2015 to 2026 — IL&FS, COVID, the small-cap euphoria, the 2024-25 correction, the gold rally of 2025. We eliminated survivorship bias, look-ahead bias, and poor execution simulation. Bloomberg-sourced data. Walk-forward methodology. The investment equivalent of a rolling clinical trial.

One product. One fee structure. Founders' capital invested in the same strategy as every client.

How we think about building the Grey Sky Universe

Smart Core is our foundation, but not our ceiling. The broader ambition is what we call the Grey Sky Universe — a curated set of investment strategies, each born from the same philosophy.

Our product roadmap is driven by gaps — not by what distributors are asking for or what's trending this quarter. We think about gaps in two ways:

For each gap, the process is the same: design the strategy, create dataset, test it with walk-forward rigour, and launch only if we have high confidence in sustained top-decile performance through a full market cycle.

This means we will never have 20 strategies. There will be long periods where we add nothing, because nothing meets our threshold. Our AUM will grow as a downstream consequence of product quality — not as a target that shapes our decisions.

A note on alignment

The word "alignment" is overused in financial services. Every manufacturer claims it. Most of the time, it's a talking point, not a structural reality. Here is what alignment looks like in our architecture:

We work with distributors — they are important partners in helping investors discover us. But our growth is designed to be a downstream consequence of performance, not distribution muscle. We don't build products for the shelf. We build products that work, and we make them available through every legitimate channel — direct, distributor, or advisor.

We designed the business so that misalignment is structurally difficult — not just culturally discouraged.

The team — and why this combination exists

Grey Sky Capital is the synthesis of two disciplines that rarely coexist in an Indian asset management firm.

Not a fund manager who hired a coder. Not a tech company that wandered into finance. Two founders with equal depth in their domains, building a firm that couldn't exist without both.

The Observatory — and a word on the name

Grey skies are when most people stay indoors. They're uncertain, uncomfortable, ambiguous. But for a trained observer — an astronomer, a navigator — grey skies are when you refine your instruments, recalibrate your models, and prepare for what comes next.

Our blog is called The Observatory. Our tools — PMS Monitor, Fee Simulator, MF Monitor — are collectively called The Telescope. We believe that seeing the market clearly, without the distortion of emotion, bias, or sales pressure, is the most valuable edge an investor can have.

We don't predict blue skies or red ones. We build systems that work under any sky.

Who this is for — and who it isn't

We are not for everyone. And we say that with clarity, not apology.

Grey Sky Capital is built for investors who have moved past the discovery phase. You've read the finfluencers and found them lacking. You've worked with a relationship manager and wondered if their recommendations served your interests or theirs. You've evaluated PMS options and found most of them indistinguishable.

Specifically, Smart Core is designed for allocations of ₹50 lakh and above — ideally ₹1 crore or more — with a minimum 3-year horizon. It's for investors who value process over prediction, who want their capital managed by a system rather than a personality, and who understand that compounding requires patience.

If you want a star manager whose gut feeling will beat the market, we're not it. If you need a relationship manager who calls weekly with new recommendations, you'll be disappointed. But if you want a manufacturer who builds one product at a time, tests it like a clinical trial, invests their own capital alongside yours, and earns only when you earn — we'd like to have a conversation.

Grey Sky Capital is a SEBI-registered Portfolio Manager. To explore Smart Core or begin a conversation, visit greysky.capital

SEBI PMS Registration No. INP000009694
Equity investments are subject to market risks. Past performance may or may not be sustained. The performance data referenced includes backtested results that are hypothetical in nature and have not been verified by SEBI.

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