Rules based investing is a process oriented way of fund management wherein:
- The selection of the underlying is based on a pre defined set of rules
- The fund manager bias has been eliminated
- The rules help the portfolio remain “true to label” at all times
- The rules based models are able to be credibly back tested for their performance and volatility in various scenarios as there is no human intervention
The rules based funds are gaining traction globally and in India as it becomes tough to beat the benchmark when the information arbitrage becomes low when the market matures. At NJAMPL we have been following the mechanism of a systematic Rules Based Investment Approach for the various products that are manufactured and offered to clients. At NJAMPL we also believe that different types of clients have disparate risk appetites and investment horizons, so it’s important to provide a wide range of products on both Pure Equity and Dynamic Asset Allocation side.
- Investment Objective
The investment objective is to provide long term capital appreciation while focusing on high alpha generating companies across the entire market capitalisation range.
- Portfolio Composition
Portfolio would consist of 20-30 stocks. The portfolio is unbiased towards the market caps and is also sector agnostic.
- Investment Strategy
The universe for this portfolio is IISL Alpha 50. This universe is picked out of the NIFTY Large cap 100 and NIFTY Midcap 150.
NJ's rules based investment framework picks up 20-30 of the stocks that have generated highest alpha in the last one preceding calendar year and also looks at the liquidity of these companies.
The strategy is unbiased towards sectors and market capitalization and the portfolio is re-balanced once every quarter.
- Investment Objective
The Portfolio objective is to generate capital appreciation in medium to long term by investing in well-established companies.
- Portfolio Composition
Portfolio would consist of 15 stocks. The portfolio is unbiased towards the market caps and is also sector agnostic.
- Investment Strategy
Identify strong companies based on parameters such as Revenue Growth, ROCE, RoE, Free Cash Flow and Loan Growth.
Companies should be part of top 300 companies based on total market capitalisation.
Top 15 companies are selected based on above parameters.
Generally, rebalancing will be done once a year.
- Investment Objective
The objective of the portfolio strategy is to generate capital appreciation in the medium to long term through investments in equity oriented exchange traded funds (ETFs).
- Portfolio Composition
Portfolio would consist of a basket of ETFs tracking various indices.
- Investment Strategy
The universe for this portfolio is the entire universe of ETFs available.
The Portfolio manger seeks to invest in various ETFs available.
The portfolio will be reviewed on a yearly basis.
- Advantages of ETFs
Low Expense Ratio: Expense ratio is far lower than active funds
Diversification: Each ETF contain large no of stocks which help investor proper diversification
Low Portfolio Turnover: Generally, active funds have more turnovers compared to ETFs
Unbiased Approach: ETFs follow the changes of underlying index. A change in underlying index is also based on predefined quantitative parameters. Hence, there are no bias related underlying securities which may present in active funds.
- Investment Objective
The investment objective is to provide long term capital appreciation with lower volatility through dynamically managed portfolio of equity and debt securities.
- Portfolio Composition
Portfolio would consist of 15 stocks and debt / arbitrage funds. The equity portfolio is unbiased towards the market caps and is also sector agnostic.
- Investment Strategy
Optimise Returns through proper Asset Allocation of Equity and Debt asset classes from time to time.
Equity portfolio would follow investment strategy of Blue chip Portfolio.
Debt schemes / Arbitrage funds are selected based on lower credit risk, volatility, exit charges, better tax efficiency.
Asset allocation rebalancing will be done on a half yearly basis and Security rebalancing will be done on a yearly basis.
- Investment Objective
The investment objective is to provide long term capital appreciation while focusing on creating a dynamic asset allocation approach in allocating the capital into efficient and well performing ETFs and arbitrage funds.
- Portfolio Composition
Portfolio would consist of ETF portfolio and debt / arbitrage funds.
- Investment Strategy
Optimise Returns through proper Asset Allocation of Equity and Debt asset classes from time to time.
The Portfolio manger seeks to invest in various ETFs available for equity portfolio.
Debt schemes / Arbitrage funds are selected based on lower credit risk, volatility, exit charges, better tax efficiency.
Asset allocation rebalancing will be done on a half yearly basis and Security rebalancing will be done on a yearly basis.
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