Nothing is as powerful as an idea whose time has come – Victor Hugo
Did you know that the Nifty 50 and Nifty Next 50 cover 77% of the total stock market capitalization? This gives you exposure to all the major sectors and because of the free float market cap weights, the companies that are doing well get higher weightage. Therefore, with Nifty 50 and Nifty Next 50 in your portfolio, you effectively buy India.
Index funds are today on the radar of all equity investors because majority of equity mutual funds have been unable to beat their benchmarks over shorter and longer time periods as various independent reports show. This used to be dismissed as a global phenomenon but data shows that this is very much true for India also. Index Funds are an idea whose time has come in India.
One of the primary reasons for mutual funds under performance is that the 1-2% fixed fee that mutual funds charge is a big drag on returns which they are not being able to overcome. Index Funds also take away the risk of choosing a fund manager and fund house. An investor is therefore only left with risk of managing market fluctuations and volatility. But that also requires a process and a plan.
Everybody has a plan until they are punched in the face – Mike Tyson
Equities have beaten all asset classes like real estate, gold and fixed deposits/bonds over economic cycles and is also the best option to beat inflation. However, they are also accompanied by volatility which can investors cannot handle if they don’t have a process to manage this risk. HNIs and Family offices have dedicated managers to manage their equity portfolios for them. Now thanks to technology, similar risk management processes are accessible for all investors.
Introducing Index Alpha
Our goal at QED Capital has been to provide investors with simple, transparent and low-cost investment solutions for all investors irrespective of ticket size. We also believe in process driven investing. And that is why after extensive research and testing we developed a rule-based system driven investing solution to manage downside risk and deliver equity like returns. Technology today enables us to democratize that solution at Rs 1/ day.
Index Alpha can be the “Core portfolio” to build wealth either by way of lumpsum investment or by way of SIP over the long run. Index Alpha comprises of 2 equity ETFs and 1 debt ETF. This ensures that your investments are in liquid assets which can be accessed in case of any emergency. After all, what use is money if it is not available when you need it the most.
Index Alpha ticks all our three boxes of simplicity, transparency and low cost. Our aim was to develop a strategy that delivers equity like returns with less reduced volatility along your wealth creation journey.
Every month our quantitative research team runs the algorithm driving our Index Alpha investing system to determine the appropriate allocation weights for the two equity and one debt etfs. Smallcase enables this rebalancing to be applied in 2-3 clicks. Therefore, this equity strategy can also be used by investors in kinds of market scenarios as dynamic risk weights adapt to the prevalent market scenario.
The table below shows how IndexAlpha has protected capital during severe market downturns thereby limiting downside risk.
Down side risk is managed by re-balancing of weights and ensuring that the initial risk that we have taken is maintained within certain bounds. Algorithms developed by our quantitative research team focus on risk management by periodic re-balancing of these weights.
Democratizing Index Investing – Rs. 1/ day
You can buy Index Alpha smallcase at a cost of Rs. 1/day. Yes, you read it right. India will achieve true economic freedom when all Indians have equal access and opportunity to wealth creating opportunities. We believe that Index Funds are the best “Core” portfolio product for investors who are looking to build a corpus for financial freedom, retirement or any other long-term goal. Our team has also invested in this smallcase and will travel along with you and Index Alpha will be your guide and partner in this journey.