{"id":2026781,"date":"2015-06-20T20:55:46","date_gmt":"2015-06-20T15:25:46","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=2026781"},"modified":"2015-06-20T20:55:46","modified_gmt":"2015-06-20T15:25:46","slug":"momentum-should-be-part-of-every-portfolio","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2015\/06\/20\/momentum-should-be-part-of-every-portfolio\/","title":{"rendered":"Momentum should be part of every portfolio"},"content":{"rendered":"

The Two Anomalies in Finance<\/h3>\n

Momentum and Value remain the two “anomalies” in finance. The Efficient Market Hypothesis cannot explain why value investing, where investors pick up “under-priced” stocks, and momentum investing, where investors bet on stocks that have already run up, give out-sized returns compared to the rest of the market. After all, aren’t markets supposed to discover the “right” price and negate these effects? <\/p>\n

Investing in Momentum<\/h3>\n

Value investors get a lot of face-time in media – people like to hear about stocks that are “hidden gems” that can suddenly come alive and give out-sized returns. However, very little is spoken about momentum investing. This results in investment portfolios that are underweight momentum.<\/p>\n

The problem with momentum investing are the large draw-downs. When momentum stocks tank, they do so spectacularly. The draw-down keeps away most mutual funds from seriously pursuing this strategy: a) they can’t get out easily, and b) if they show too much volatility, investors will revolt.<\/p>\n

But individual investors don’t have these constraints if they learn to embrace volatility. <\/p>\n

Comparing Momentum Returns<\/h3>\n

Our FundCompare<\/a> tool allows you to see how momentum investing has fared over different time-frames and compare their returns to whatever mutual fund you own. For example, if you compare Momentum with the ICICI Value Discovery Fund, here’s how the monthly returns compare:<\/p>\n

<\/p>\n

Between 2014-01-01 and 2015-06-18, Momentum has had an IRR of 70.16%<\/strong> vs. ICICI Prudential Value Discovery Fund’s IRR of 50.05%<\/strong>\"download\"<\/a><\/sup><\/p>\n

How much should you invest?<\/h3>\n

Risk, at the end of the day, is whatever allows you to sleep at night. You could start with a 10% allocation and scale till you reach your limit. Whichever way you choose to go bout it, our Momentum Theme<\/a> will be ready for you.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Two Anomalies in Finance Momentum and Value remain the two “anomalies” in finance. The Efficient Market Hypothesis cannot explain why value investing, where investors pick up “under-priced” stocks, and momentum investing, where investors bet on stocks that have already run up, give out-sized returns compared to the rest of the market. After all, aren’t … <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3471,9],"tags":[3491],"class_list":["post-2026781","post","type-post","status-publish","format-standard","hentry","category-investing-insight","category-your-money","tag-momentum","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2026781","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=2026781"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2026781\/revisions"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=2026781"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=2026781"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=2026781"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}