Good quality, low beta stocks

Low beta stocks that are rated ‘BUY’

Volatility measures the risk of security. A stock with higher volatility will see its price fluctuate rapidly within a specific period, whereas a low volatility stock will not see as much price fluctuation. Higher the volatility, the higher the perceived risk. 

Beta is one of the ways of measuring volatility. The stock market’s beta is considered to be 1. Any stock with beta of less than 1 would be less volatile than the market. Good quality, low beta stocks ensure that the portfolio is not very sensitive to market volatility.

The Safe Haven smallcase consists of stocks whose beta is less than 0.65 and are rated ‘BUY’ by more than 65% of the research analyst covering them. 8/8 companies in the smallcase have more than 10% shareholding by institutional investors. This indicates high management quality, good performance track record and expectations of bullish performance going forward. 

Momentum investing is a strategy based on the observation that stock movement trends can persist for some time. The strategy attempts to capitalize on this trend by buying stocks that have been trending up and selling ones that are trending down.

The Safe Haven smallcase has been trending up over the previous 6 months and has returned 26.3% compared to Nifty Smallcap 100 returns of 12.8%.

Add a dynamic edge to your portfolio

Smart Beta strategies aim to increase the return potential of the investment without increasing risk. Such strategies take the same amount of risk as the benchmark indices but increase the return potential by using better screening or weighting criteria.

Quality – Smart Beta smallcase provides investors with an opportunity to invest in high-quality businesses. The strategy is implemented by screening for companies that match specific fundamental criteria that indicate the quality of the company.  The strategy allocates weights to the stocks with the aim of maximizing the Sharpe ratio. 

Low Risk – Smart Beta smallcase provides investors with an opportunity to exploit the phenomenon of the low-risk anomaly – a phenomenon where low-risk stocks have consistently outperformed high-risk stocks. This smallcase uses a quantitative methodology that decides the weights of the stocks in such a manner that diversification is maximized. 

Dividend – Smart Beta smallcase contains stocks which have been increasing their dividends on a consistent basis, weighted in a manner to minimise the volatility of the smallcase.

Markets update

In a broad-based recovery post-budget session, benchmark indices closed in the green this week. Nifty closed up 1.14%, since Jan 31st, at 12,098.4 and Sensex closed up 1.03% at 41,141.9. Nifty Midcap 100 and Nifty Smallcap 100 also gained 1.98% and 1.41%, respectively during the same period.

During its monetary policy committee meeting, RBI retained the repo rate at 5.15%, stating that it was maintaining an “accommodative stance” to support growth amid rising inflationary pressure.

India Manufacturing PMI rose to 55.3 in January 2020 from 52.7 in the previous month. The latest reading pointed to the strongest pace of expansion in the sector in nearly eight years. Services PMI jumped to 55.5 in January 2020 from 53.3 in the previous month. This was the strongest pace of expansion since January 2013.

Twitter Take

These Founders Want to Reduce Risk in Stock Investing@smallcaseHQ @vasanthkamath @anugrah_shrivas @rohang07 #35Under35

By : @Shiprasorout https://t.co/eMFZki7ZvL

— @EntrepreneurInd (@EntrepreneurIND) February 3, 2020

Read Entrepreneur India’s article about smallcase here.

2019 in Review

With your continued support & feedback, we were able to expand the smallcases ecosystem to over 6,50,000 users, 8 brokerage partners, and 30+ smallcase Managers. Undoubtedly, 2019 was the best year (thus far) for us at smallcase! Read the full Year in Review here.