RMI ® Active IFTY 5

What if you would have a choice to simulate the NIFTY 50 by 5 stocks instead of 50. That means using just five stock allocations you can not only simulate NIFTY 50, but do it at 9% lower standard deviation compared to NIFY 50, with 70% average invested cash and more than 180 days average holding for each component. Above this your RMI portfolio just fell 30% in 2008 compared to 60% for Nifty, you have an average worst case drawdown near 15% and about 50% chance of outperforming Nifty any running year. All comparisons to NIFTY are owing to lack of a disruptive active benchmark accomplishing an Active 5 selection out of top 50 in India. In real terms an Active model cannot be compared to NIFTY. The IFTY 5 delivered an annualized 10% (2% above NIFTY) from July 2006.

Well this is not stellar performance, as we are used with a much better ACTIVE 10 performance, but considering capital protection, lower volatility, ease of execution and a stock selection mechanism highlighting the top 5 India blue chips, Active IFTY 5 caters well to the Indian investors and global participants looking at the best in India.

We created ACTIVE IFTY 5 (updated for version 3) for the signal driven Indian market, where traders crave for stock picks. It’s still hard to simulate this portfolio on Options owing to low liquidity even in the top 50 stocks. So this remains a spot only portfolio for us. All simulations for 2 times and 3 times are just simulations and should not be attempted using derivatives.


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