Stay the Course with Equities. Volatility isn’t the Time to Sell.
Need for Low Risk Product:
MidCap index went down by a whopping 20% in last two years as against 9% rise in Nifty. This meant a MidCap underperformance of close to 30% in last two years. As a result of this scary development, there were deeper cuts in retail portfolios across the country.
Investing in Indian equity markets is being more and more influenced by directions from the regulators. By mandating MFs to invest most of their money in top 250 stocks, based on market capitalization, a firm support and an assured demand for those stocks are guaranteed. A sudden and lasting meltdown in their valuations is very difficult to imagine which implies capital is more likely to be preserved and grow in tandem with overall market.
However, stocks are not dropped from Index based on their poor performance. Hence, it may not be wise to hold on bad stocks from this universe, just because they are in the Nifty. Vivekam wanted to have all positives of the Nifty while eliminating bad apples from the basket and came out with WIFTY (Winners in Nifty).
Enduring product in evolving market:
WIFTY is the latest product to be added to our bouquet of investment products. This is a low risk and high liquidity product which will only comprise of large cap companies from the Index Nifty50, at all times. Individuals with a low appetite for risk and who have a significant amount to invest can get exposure to the stock market through this product.
Like the rest of our equity products, the objective is to generate alpha. The idea is to analyze the 50 stocks and hold only those stocks that are growing. Once bought, stock should continue to be held in portfolio unless the results turn bad in subsequent quarters or the stock is taken off the Index.
The effort is to make sure that the existing investment of clients is always representative of growth stocks in Nifty in the same weights as they represent in Nifty. There could be some churn along the course because of..
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Good results announced by a new stock may call for its inclusion in portfolio.
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To raise money for new stock, a portion of existing holdings will have to be sold.
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When an existing stock from portfolio goes out of Nifty, we need to sell the same and use the amounts to buy further stocks from eligible list.
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While the volume of churn will remain very small, there could still be small orders to help us rebalance the portfolio in tune with the latest weights of stocks in portfolio.
Performance of WIFTY over last 10 years:
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Performance of WIFTY from the year 2009 in CAGR |
||||||
|
3 years |
4 years |
5 years |
6 years |
8 years |
10 years |
|
| WIFTY return |
15.42 |
14.96 |
16.46 |
16.69 |
14.94 |
15.51 |
| Nifty return |
10.29 |
10.36 |
12.89 |
12.95 |
11.51 |
12.53 |
| Out performance |
5.13 |
4.60 |
3.57 |
3.74 |
3.43 |
2.98 |
Things you may wish to know more:
There will still be some nuances, as is common in any product, which can be explained to interested investors at our office. We have tested the product and its efficacy vis-à-vis Nifty in the last 10 year period and the results are as above. This product is ideal to clients who are nervous about the direction of the market in general and midcaps or small-caps in particular.
Fee slashed and performance fee waived:
Vivekam charges a flat fee of 0.75% per year (pro-rata) on the portfolio value, if investment is 10 lakhs or more, at the beginning and again on 1st April of each year for the next 12 months. There will not be any performance charges levied on the client. Investments below 10 lakhs will be charged a flat fee of 1% per year.
Interested investors are most welcome to contact us through email info@vivekam.co.in or on land lines 040 2354 9940, 9941, 9942, 9943 or on mobile nos 91000 09890, 91000 09891
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