A strategy for aggressive investors seeking a focused allocation towards Mid and Small Cap stocks
Investment Rationale
The primary hypothesis of this strategy is that mid and small-cap companies are riskier, but they could provide higher returns in the long term as they grow in size. Diversification is the key to
Modern Portfolio Theory as it helps to reduce the risk and enhance returns however for those investors who have already diversified their investments the focus may be higher returns.
The stock selection criteria consist of fundamental checks on parameters like free cash flows, earnings yield, quality of earnings and pricing parameters like momentum strength. The portfolio consists of companies growing at a higher pace than the market average. To reduce volatility of the portfolio, various constraints on stock, sector and group level are applied.
Key highlights:
1) The universe is mid and mall cap stocks from Nifty 500 companies.
2) There are 15 to 20 stocks in the portfolio.
3) Rebalanced once in 4 months.
4) Max weight of 25% to 30% per sector.
5) Constraint of 7% to 8% per stock to maintain weightage distribution.
6) This strategy is backtested on data of 10+ years.
7) Suitable for aggressive investors.
Performance
Unlock all metrics
As per applicable guidelines, returns stay locked unless you ask to view them
About the Manager
Understand smallcase costs and returns
