Strategies to Meet
Your Investment Horizons
Investments are driven by purpose & the right investment strategies help you realize that purpose. At QED, we have three different types of strategies that help achieve your investment goals. The combination of AlphaBets & IndexAplha investment strategies allows low-cost diversification and cost-effective concentration. These complementary strategies allow wealth creation over the long term. Under the Core Equity methodology of investment, long-term measures of low volatility, momentum and value/quality are blended in a systematic manner to overcome common behavioral biases.
AlphaBets -
The Actively Managed Satellite
AlphaBets consists of a portfolio of actively managed equities. This strategy is suitable for those investors, who are ready to commit their investible surplus for a period of at least five years.
Only equities confirming our strict selection parameters are chosen in AlphaBets. While avoiding most common behavioural biases, and sticking to the rule-based approach, this satellite of actively managed equities ensures wealth creation for our investors.
How AlphaBets Work? ( Quant Investment process)
Investment Universe
- Top 500 cos ranked by market cap
- Top 100 ranked as large cap
- Next 400 ranked as mid & small cap
Quantitative Filters
- Group of 400 stocks run through a momentum filter
- Then run through a second filter of low volatility
- Reduced & filtered into a smaller universe
Portfolio Construction
- Rank Stocks on momentum & low volatility
- Sanity check for quality & liquidity
- Position size based on risk
- Execution process decides entry & exit
Salient features of AlphaBets
- Every stock has to justify its place in a portfolio, during every review subject to transaction costs.
- Not more than 10% is invested in a single stock.
- Maximum 15-20 stocks are held.
- Adverse market conditions are dealt with a defensive approach & capital is conserved using debt instruments.
- Periodical rebalancing ensures that winners stay & losers go.
Index Alpha -
The Passively Managed Core
Index Alpha is a passively managed fund aimed at generating long term wealth. It is suitable to build a corpus to meet investor specific investment horizons such as retirement, buying a home etc.
How Index Alpha works (Quantitative Investment Process)
Passive investment strategies aren’t lazy, but insightful. These time tested aren’t aimed at timing and beating the market. The emphasis is on systematic investment with a disciplined approach to minimize the risks. When financial markets show signs of turbulence or downtrend, Index Aplha’s tactical fund allocation takes cover until good conditions or an uptrend resumes.
Salient features of Index Alpha
- Tactical fund allocation is done to manage financial risks.
- Protects the portfolio from extreme drawdowns.
- This is not a tool to enhance returns by timing the market.
- It may underperform during the roaring bull markets or sharp V-shaped recoveries, as its complete focus is on minimizing risks.
- Simple to understand, but tough to follow approach.
Index Alpha Serves Two Key Purposes -
Building corpus by leveraging market
Reducing risk to preserve the corpus
This can be understood with the following examples:
This comparison of IndexAlpha & Nifty 50 explains the performance difference of both the funds. Now let’s see, how IndexAlpha minimizes risks.
Index Alpha Balanced Portfolio observed a lower fall compared to Nifty 50 and also recovered faster in the aftermath. Thus, performed “true to label” by protecting the downside
Bringing Long-Term
Capital Growth
Under the Core Equity methodology of investment, long-term measures of low volatility, momentum and value/quality are blended in a systematic manner to overcome common behavioural biases. As a stool needs at least three legs to stand on, we feel a Core Equity portfolio should be a multifactor portfolio comprising at least three factors. This results in the addition of two least correlated factors: Momentum and Value/Quality to the equation. A combination of three factors reduces cyclicality of factor performance.
Through this, we aim to generate long-term capital growth from an actively managed portfolio of equities with a large cap tilt.
The Core Equity portfolio only includes those stocks which pass our strict stock selection filters. A disciplined and robust process governs all our actions throughout the process.
Rebalancing at a predetermined frequency ensures “Winners Stay, Losers Go”
How Core Equity works? - Quant Investment Process
Investment Universe
- Cos listed on NSE
- Top 300 cos ranked by market cap
Quantitative filters
- Group of stocks run through a low momentum filter
- Then run through a second filter of low volatility
- Dividend Yield
Portfolio Construction
- Rank stocks on Momentum & Dividend Yield
- Sanity check for Quality & Liquidity
- Execution process decides entry/ exit
Salient Features
- Tilt towards large caps so can be a core portfolio for investors
- Every stock has to justify its place in a portfolio, during every review subject to transaction costs.
- Not more than 3-4% is invested in a single stock.
- Maximum 30 stocks are held.
- Adverse market conditions are dealt with a defensive approach & capital is conserved using debt instruments.
- Periodical rebalancing ensures that winners stay & losers go.
The Best of Both Worlds
Discipline & consistency in investments can lead to wealth generation. Our portfolio management services ensure a systematic allocation of AlphaBets, IndexAlpha, gold and bonds. This approach combines both wealth growth & risk mitigation and helps you accomplish your financial goals.
Take a step towards your wealth management journey! Connect with us to know more.