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Dynamic Asset Allocation with Wright Research

Dynamic Asset Allocation with Wright Research
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  • A portfolio of equity, bond, and gold gives better risk-adjusted returns than only equities
  • This smallcase combines Smart Beta factor investing with ETF asset allocation
  • Wright Research smallcases are managed by Sonam Srivastava, a SEBI Registered Investment Advisor

Asset Allocation Rationale

Let us look at the equity markets in the two recent time periods – the year 2017 and 2018.

Now, look at 2 portfolios:

  • One with 80% allocation to equities and 20% to bonds
  • The other with 20% to equities and 80% to bonds

The equity majority portfolio has better performance in 2017 but the bond majority portfolio gives better risk adjusted returns in 2018.

Multi Asset Tactical Asset Allocation

The strategy Multi Asset Tactical by Wright Research chooses the best asset mix using stocks along with bond and gold ETFs in the two different types of market regimes.

Regime modelling: The regimes are predicted using a model that looks at short term and long term price patterns and economic data. We chase the equity market trend when the market is favourable and try to control the risk when it is not

Stock Selection: While we trade bonds & commodities through ETFs, the choice of stocks in the portfolio comes from equity factor strategies or the popular name smart-beta. The individual equity buckets chase factors like:

  • Momentum or trend following
  • Value or choosing the undervalued stocks
  • Growth or choosing high growth stocks
  • Quality or choosing the stocks with good earning quality

Historical Performance: shows that the portfolio has performed well is all market conditions.

Live Performance

The Multi Asset Tactical smallcase by Wright Research went live on 26th July 2019. Since then, the performance has also been excellent and encouraging – as the smallcase has outperformed the Nifty by almost 7%! It has gained 4.68%, while Nifty-50 has actually lost -2.21% over the same period.

Multi Asset Tactical Live Performance

Multi Asset Tactical Live Performance, since launching on 26th July 2019

We also have another strategy following the same rationale, with smaller minimum capital requirement.

Check out both these smallcases at: https://wrightresearch.smallcase.com/.

Lastly, in case you are new to ETFs and not sure why they were used to create this smallcase, learn why ETFs are fairer than Mutual Funds for long-term investors as well as ETFs 101: What is an ETF?

Happy investing!

Sonam Srivastava
Sonam Srivastava
Sonam is a SEBI Registered Investment Advisor with more than 8 years experience in Portfolio Management and Quantitative Trading. Sonam holds B.Tech from IIT Kanpur and a Master's in Financial Engineering from Worldquant University. Before founding Wright Research, she was a Portfolio Manager at Qplum, where she was also using ML/AI to automate investment decision making. | The content in this article is purely the author’s personal opinion and is for informational and educational purposes only. It 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. The views and opinions stated in the content belong to the author. WRYGHT RESEARCH & CAPITAL PVT LTD does not uphold nor promote any of the views / opinions. | WRYGHT RESEARCH & CAPITAL PVT LTD is a SEBI registered research analyst (Regn. No. INA100015717)

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The views expressed in this article are those of the author and do not necessarily reflect the views of Smallcase Technologies Private Limited (STPL) or any of its associates. The information provided in this article is for educational and informational purposes only. Investors are responsible for their investment decisions and are responsible to validate all the information used to make the investment decision. Investors should understand that his/her investment decision is based on personal investment needs and risk tolerance, and performance information available on here is one amongst many other things that should be considered while making an investment decision. Past performance does not guarantee future returns. 

Investments in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

The content and data available on the website, including but not limited to index value, return numbers and rationale are for information and illustration purposes only. Charts and performance numbers do not include the impact of transaction fee and other related costs. Past performance does not guarantee future returns and performances of the portfolios are subject to market risk. Data used for calculation of historical returns and other information is provided by exchange approved third party vendors and has neither been audited nor validated by the Company. Detailed return calculation methodology is available here . Detailed volatility calculation methodology is available here .

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Dynamic Asset Allocation with Wright Research
Multi Asset Tactical smallcase by Wright Research Multi Asset Tactical smallcase by Wright Research
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