Four new innovative smallcases by Windmill Capital!

At Windmill Capital, our mission is to be a one-stop shop for all the investment needs of retail investors. We understand that different investors have different financial goals and hence have varied appetites for risk tolerance. Thus, the smallcases that we have on offer are of various types — asset allocation, thematic, fundamental/quantitative strategies etc. Since we started building smallcases, these smallcases have been investor favourites. These smallcases are based on a set of parameters that are used to select stocks at the time of rebalance/review. The aim is to try and find stocks that are not fairly priced, and generally, such cases are more prevalent in the midcap and smallcap sections of the market. Thus, these smallcases have been a high-return, high-risk affair for most investors.

Our team has been researching to come up with a solution that can significantly reduce the risk—volatility of these smallcases while maintaining high returns. The solution, as we explored, lay in mixing different types of smallcases with varying asset allocation!

You see, pure equity-based smallcases have a higher risk because the portfolio invests only in a single asset class, which is equities. Hence, an equity market meltdown or some negative news in the broad equity market can adversely affect the performance of pure-equity smallcases. This problem gets aggravated in the midcap and smallcap sections of the market, as they are inherently more volatile. This made such smallcases out of reach of some investors, even though they believed in the underlying strategy.

Thus, we came up with the asset allocation version of these pure equity-based curated smallcases. Basically, the portfolio would invest in equity as per the underlying theme/strategy of the smallcases, AND also invest some amount into other asset classes like debt, gold and cash. Diversifying the portfolio into different asset classes while also giving exposure to a particular strategy would help in superior risk-adjusted returns (high returns, without as much risk :)). If the equity markets crashed, the gold, debt, and cash portion of the portfolio would help protect the downside. This would not be the case had the portfolio only consisted of equities.

How does this work?
We’ve built proprietary strategies that analyse momentum across the Nifty Largecap, Midcap, and Smallcap indices. Based on this analysis, we help investors allocate funds between equities and two alternative asset classes: gold and debt, accessed via the Gold case and Liquid case ETFs, respectively.
The switch between pure equity and alternative assets is guided by our technical framework. If the weighted average price strength, calculated using the pure equity model’s allocation across segments, is weak or declining, the model moves fully into gold and debt, equally split through the Gold case and Liquid case ETFs. If price strength is positive, the model switches back to the equity version of the smallcase.
This way, we enable investors to capture the benefits of a pure-equity strategy while also aiming for improved risk-adjusted returns. The approach is systematic and avoids the need for investors to time their entries or exits based on market sentiment.
Now, without further ado, let’s look at the 4 smallcases that we are planning to launch under this unique regime.

Smallcap Quality & Growth – Asset Allocation Model

This is an asset allocation version of the Smallcap Quality & Growth Model. The equity portion of the smallcase selects good quality smallcap growth companies to help create wealth steadily over the long term. Our proprietary strategy keeps realigning the portfolio value between different asset classes in the smallcase, to generate high returns with reduced portfolio volatility.

Growth at a fair price — Asset Allocation Version

This is an asset allocation version of the Growth at a Fair Price Model. The equity portion of the smallcase consists of growing companies experiencing positive earnings growth and having a reasonable margin of safety. Our proprietary strategy keeps realigning the portfolio value between different asset classes in the smallcase, to generate high returns with reduced portfolio volatility.

Value and Momentum — Asset Allocation Version

This is an asset allocation version of the Value and Momentum Model. Positive momentum stocks available at a discount to their peers, along with diversification benefits of gold, debt and liquid bees. Our proprietary strategy keeps realigning the portfolio value between different asset classes in the smallcase, to generate high returns with reduced portfolio volatility.

GEM-Q — Asset Allocation Version

This is an asset allocation version of the GEM-Q Model. Efficiently managed growing companies with positive momentum, along with diversification benefits of gold, debt and liquid bees. Our proprietary strategy keeps realigning the portfolio value between different asset classes in the smallcase, to generate high returns with reduced portfolio volatility.

It’s important to highlight that these smallcases will undergo weekly reviews by our team, with a higher rebalance frequency compared to their corresponding pure-equity (parent) smallcases. While the equity component will continue to be reviewed quarterly, the asset allocation will be assessed and adjusted on a weekly basis.

With these asset allocation smallcases, we aim to bridge the gap between high-return strategies and risk management. By blending proven equity themes with dynamic exposure to debt, gold, and cash, we offer investors a more resilient investment experience—one that seeks to deliver strong returns while cushioning downside risks.

These smallcases are designed for all kinds of market conditions, ensuring investors stay invested with confidence, without worrying about timing the markets. 

Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of a SEBI recognized supervisory body (if any) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

The content in these posts/articles is for informational and educational purposes only and should not be construed as professional financial advice and nor to be construed as an offer to buy /sell or the solicitation of an offer to buy/sell any security or financial products.Users must make their own investment decisions based on their specific investment objective and financial position and using such independent advisors as they believe necessary. Windmill Capital Team: Windmill Capital Private Limited is a SEBI registered research analyst (Regn. No. INH200007645) based in Bengaluru at No 51 Le Parc Richmonde, Richmond Road, Shanthala Nagar, Bangalore, Karnataka – 560025 creating Thematic & Quantamental curated stock/ETF portfolios. Data analysis is the heart and soul behind our portfolio construction & with 50+ offerings, we have something for everyone. CIN of the company is U74999KA2020PTC132398. For more information and disclosures, visit our disclosures page here.