One Year of Outperformance

by Sonam Srivastava

Published On Aug. 8, 2020

In this article

Last week, Wright completed one year of offering our flagship portfolios to investors viasmallcase! This first year of our journey has been the most incredible — while we found validation of our quant methods working well in the markets, the markets went through the biggest crash since 2008 due to the coronavirus pandemic and an emphatic recovery.

Consistent outperformance in all market conditions

We stuck to our motto ofconsistent outperformance in all market conditionsand delivered across the board.

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Comparison with benchmarks

Compared to relevant benchmarks— in the one year our strategy gave 23.4 % return whereas the Nifty Index gave 0.2% return. The popular balanced mutual fund HDFC Balanced Advantage Fund gave 7.5% return in the same time.

Looking at the year 2020, we gave 11.1% return in 2020, Nifty gave -9.7% and the balanced mutual fund gave 3.0%.

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Systematic Philosophy

Our philosophy for investments is simple and transparent.

Equity Factors

We break down a portfolio’s performance into well known factors like value, momentum, growth, quality etc and tactically invest into the best performing factor based on the market conditions. We also use bond and gold ETFs in our portfolios for further diversification.

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Market Regimes

We identify regimes in the markets — the risk on and the risk off. When the markets are trending — we invest in equity factors, when they are volatile we move to bonds, gold & low volatility factors. The reason for this is simple and intuitive — as seen below in trending markets, equities give exceptional returns while in volatile times it’s better to diversify to other avenues.

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What happened under the hood?

Our model deallocated to bonds and gold in early February and we further deallocated in March to save us from the Covid drawdowns and we quickly reverted to higher equity allocation in April to ride the recovery.

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Among the equity factors, we were more allocated to low volatility factors in March while we moved to momentum and efficiency factors in April.

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What happens next — Wright Views!

To guide through each rebalance, we are starting a monthly newsletter — Wright Views. Here we’ll explain the rationale behind each rebalance. We see that smallcaps are having a run and gold is picking pace, our bets are on high growth & high short term momentum stocks this month. Our broad allocations to sectors & styles look like this.

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Check out more details in the first edition of Wright Views.

Our Investment Philosophy

Learn how we choose the right asset mix for your risk profile across all market conditions.

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