Higher sharpe means that the product generates more return without taking extra risksĪfter conducting multiple studies, writing numerous computer programs and running 1000s of simulations, we were able to generate an algorithm that can efficiently distribute your money in the selected asset classes. If we are given two investment products (portfolios, stocks, asset classes) and asked to pick one of them for investment, the best way is to pick the one with the higher sharpe ratio. The Sharpe Ratio calculates the excess returns generated per unit of risk.

Our research team studied many algorithms and went ahead with an algorithm that maximizes the Sharpe Ratio of the portfolio. This ETF always generates positive returns, irrespective of the current market situationĪfter identifying the constituents, the next step was to build an algorithm that decides how much money should go into each asset class. It is a good idea to increase the allocation towards fixed income in volatile times. The portion of investors money that will go into this ETF will generate domestic gold prices-like returns These companies are generally smaller in size and their prices are more volatile as compared to the members of Nifty, but they have the potential to offer higher returnsīuying physical gold is a thing of the past. This ETF tracks the performance of the next 50 stocks that are not included in the Nifty. Thus, it will be invested in big companies like TCS, Infosys and Reliance that are a part of the Nifty Index The portion of investors' money that goes into this ETF will generate Nifty-like returns. These factors together tilted the scale in favor of creating a product using ETFs.Īfter confirming that the below ETFs have sufficient liquidity they were included in the All Weather Investing smallcase. Hence their expense ratios are low compared to mutual funds.įurthermore, ETFs can also be bought and sold via broking platforms with the click of a button, making investing in them very easy. Similarly, investing in a gold ETF will allow investors to earn the returns of investing in physical gold.ĮTF instruments are passively managed vehicles, as they follow a certain index or theme and need not take calls on selective companies. If the Nifty generates a return of 5%, the Nifty ETF will also generate approximately the same returns. So if one wants to invest in the Nifty index, one can just buy the Nifty ETF, instead of buying all the 50 stocks in the same proportion as the Index. For example, the Nifty Index consists of 50 stocks.

It trades on the exchange – just like stocks.

Is based on exchange traded funds (ETF) to ensure low cost structureĮTFs are financial instruments that track a particular index, commodity, or a group of stocks.

Should significantly reduce the fluctuation in portfolio value and provide a smooth wealth creation journey.

Investors need not worry about timing their investments and exits.

Is suitable for investment regardless of stock market mood.

This provides investors the benefit of stock market participation.

Provides exposure to equity instruments offering significantly higher returns compared to returns of traditional bank instruments like FD/RD.

The above discussed factors convinced us regarding the need for a product which would suit the needs of first time investors and fulfill the following objectives : The need for all weather, low cost investment instrument On top of that, it is extremely difficult to manage physical gold. Gold is more of a wealth protector than wealth builder. It is always extremely difficult to sell a house or land when you immediately need money. Real Estate, Gold and other alternative investments have their own peculiar problems.

But what if you need to liquidate your investment due to some emergency and the stock markets are at a low? Stocks? Yes, if you don’t need that money in the next 3–5 years and are willing to ignore the near term fluctuations. Thus, anybody using only such investment products is actually becoming poorer instead of building wealth. In India, the rate of increase in the prices of goods and services has always been very high as compared to the returns generated by the money invested in bank fixed deposits and other traditional products.

All weather calculator case