Tag: theme

We have been tracking different investment strategies through our Themes – a handy way to create, track and allocate capital to different investment strategies. As our frequent readers know, we do a “doodh ka doodh pani ka pani” theme whenever analysts come out with portfolio recommendations. Add to the mix our own value and quantitative strategies, and we have a fairly wide array of investment options for investors to choose from.

Here’s a roundup of how the different Themes performed, and the performance of ETFs over the same time-frame. Because at the end of the day, if the Nifty ETF out-performs the bheja-fry, why bother?

Three Months

From 2013-9-13 to 2013-12-13

Should you have invested in ETFs, these are the returns over the same period.

Two Months

From 2013-10-15 to 2013-12-13

Should you have invested in ETFs, these are the returns over the same period.

One month

From 2013-11-14 to 2013-12-13

Should you have invested in ETFs, these are the returns over the same period.

Conclusions

Well, three months is a very small window to draw any meaningful conclusions but here are some observations:

1. Quantitative Value had 2 in the top 5 performers over the last 3 and 2 months. It is as close to “Investing Without Emotions” that you will ever get.
2. ETFs turned in some very meh returns.
3. Banks and mid-caps have been out-performing.
4. Gold lost its luster – but don’t tell that to Indian house-wives 🙂

Morgan Stanley has created two sets of investment portfolios to “play” the poll results (MoneyControl)

Heads

The first is if there is a strong election result. Is basically a basket of high-beta, high-leverage, cyclical, strong short momentum stocks likely to outperform as the market gains conviction in a strong poll result.

Theme: Morgan Stanley’s Strong Election Picks Dec-2013

This portfolio’s beta is around 1.14. But if you are going to be bullish, why hold yourself back? The Market Fliers Theme does a better job of pushing the pedal to the metal, so to speak, with a beta of 1.84. High beta has been flying lately, the theme is +14.89% since inception, vs. the Nifty’s +4.31%

Tails

And the second is if there is a fragmented election result. Basically a good quality GARP basket, low PEG, high ROE, low beta and strong long-term momentum.

Theme: Morgan Stanley’s Fragmented Election Picks Dec-2013

This portfolio’s beta is around 0.54. But if you are going to play defense, commit! The Market Elephants Theme, with a beta of 0.27, barely has a pulse but beats the Morgan Stanley portfolio on both Sharpe and Information Ratio.

So, dood ka dood, paani ka paani!

We are in the middle of what can be best described as the most hated rally of all time. Retail investors have been sellers, having seen similar highs three times already. And economists, who should know better than to opine about the stock-markets, have labeled the rally as “without underlying fundamentals.”

But seasoned investors will know that the market is forward looking and its default setting is “optimism.” Who knows when this rally will end? But as long as it lasts, its time to press as hard on the accelerator as you can.

Go High Beta!

We created an Investment Theme a few days ago that consists of a portfolio of fairly liquid high beta stocks. It has beaten the cr@p out of every other portfolio so far. You can have a look at the theme here: Market Fliers

 
[stockquote]PRECOT[/stockquote]