The Multi Asset Tactical smallcase by Wright Research invests in the best assets by combining stocks selected via Smart Beta factors with Bond & Gold ETFs
- A portfolio of equity, bond, and gold gives better risk-adjusted returns than only equities
- This smallcase combines Smart Beta factor investing with ETF asset allocation
- Wright Research smallcases are managed by Sonam Srivastava, a SEBI Registered Investment Advisor
Asset Allocation Rationale
Let us look at the equity markets in the two recent time periods — the year 2017 and 2018.
Now, look at 2 portfolios:
- One with 80% allocation to equities and 20% to bonds
- The other with 20% to equities and 80% to bonds
The equity majority portfolio has better performance in 2017 but the bond majority portfolio gives better risk adjusted returns in 2018.
Multi Asset Tactical Asset Allocation
Regime modelling: The regimes are predicted using a model that looks at short term and long term price patterns and economic data. We chase the equity market trend when the market is favourable and try to control the risk when it is not
Stock Selection: While we trade bonds & commodities through ETFs, the choice of stocks in the portfolio comes from equity factor models or the popular name smart-beta. The individual equity buckets chase factors like:
- Momentum or trend following
- Value or choosing the undervalued stocks
- Growth or choosing high growth stocks
- Quality or choosing the stocks with good earning quality
Historical Performance: shows that the portfolio has performed well is all market conditions.
The Multi Asset Tactical smallcase by Wright Research went live on 26th July 2019. Since then, the performance has also been excellent and encouraging — as the smallcase has outperformed the Nifty by almost 7%! It has gained 4.68%, while Nifty-50 has actually lost -2.21% over the same period.
We also haveanother strategyfollowing the same rationale, with smaller minimum capital requirement.
Check out both these smallcases at:https://wrightresearch.smallcase.com/.