Craving Alpha Index Advantage -v2
Download Factsheet:
Risk Involved
Rebalances: Weekly | # Stocks: 20
Suitable- for those investing less than 30% of liquid net worth with no plan to liquidate within at-least SIX MONTHS
Investment Rationale:
Covers top 500 stocks by market capitalization and using a Multi- Factor Based Model, we attempt to:
1. Invest in a strategy and not just a basket of stocks
2. Similar long term returns across all clients
Lower Churn; since stocks are only churned when they no longer fit the model
3. Optimal diversification to reduce impacts of unsystematic risk
4. Do away with common Behavioural biases.
1. Liquidity Risk- Risk that investors won't find a market for their securities, which may prevent them from buying or selling when they want.
2. Market Risk- Risk of losses on financial investments caused by adverse price movements.
3. Model risk- Risk that occurs when a financial model is used to measure quantitative information and the model fails or performs inadequately which leads to adverse outcomes for the investor.
Portfolio Construction System
Quant Based Systems build after comprehensive back testing and continuous improvisation are used for stock selection.
Creates a 20 stock subset with an optimal combination of Value & Growth stocks.
Attempts to outperform the Nifty500 Index.
Investing Philosophy
We Believe markets will always have "Value Investing" opportunities around fear in the markets. However meddling in such stocks with prudent capital allocation can be very rewarding.
Risk Mitigation
1. Liquidity Risk; is mitigated by restricting the stock universe to only the top 500 listed companies in India.
2. Market Risk; The system has in built "check valve" mechanism which triggers an exit from stock ensuring value generated from stock is preserved or stop loss prevents major loss as and when any material even- price wise or fundamentally takes place.
3. Model Risk; We acknowledge that quant based systems are exposed to "Model Risk" and hence the model is in constant over view and improvement.
Each of which are ensured by the "Rebalancing" or "Re-alignment' in the pre-defined frequency.
