FG-HUM [First Global Human + Machine Model]

All companies listed on the National Stock Exchange of India, with a market capitalization greater than Rs. 1000 crore, are included in the universe. All holdings are highly liquid. Each security must pass extremely rigorous liquidity criteria before being eligible for inclusion in the portfolio.

Following are the salient features of the process underlying the portfolio constriction: (a) At First Global, decision making is based on a combination of Human + Machine, rather than a Human-only model which changes as per the whims of a few people. Humans are unable to process the vast deluge of data that a machine can. A machine can evaluate thousands of companies, on hundreds of different factors, which is impossible for humans.Human beings are driven intrinsically by emotions, and not facts or data. This means that their decisions suffer from several classic, well-documented biases and are inconsistent. (b)&nbsp;The fund management team at First Global has decades of experience in navigating all kinds of market situations across the world and in India. It is the expertise of this team that has been coded into the model and is then applied consistently across securities.The quality of inputs, analysis, and factors that have gone into the FG model&nbsp;is of a completely different level, as compared to merely "quants" building these or trading algos. (c)&nbsp;The risk management systems are extremely advanced and focus on First Global’s number one mantra of investment management, i.e., do not lose big money. First Global has an obsessive focus on risk management and risk controls are embedded within every single step of the entire investing cycle.

As mentioned above, we do not consider stocks with a market cap below Rs 1000 crores. Even among them, we try not to have a high weightage for stocks below Rs. 5000 crores market cap as risks are higher in small caps. Portfolio selection is based on First Global’s proprietary Human + Machine Model, the ExoTech. The investment strategy is data and situation-based, that relies on the fact that flexibility is key to managing portfolios well, as no strategy works for ever. It is a blended investment strategy which is designed taking into consideration multiple factors like Value, Growth, Price Movement, Valuation, Quality of Stock, Overall Market Dynamics, etc. Essentially, it is a bias-free approach to investing. The Human + Machine Model is purely clinical. It doesn't storify investing.Risk control and not just return maximization, is key to these choices. Hence there is sufficient diversification across stocks and sectors.

We start with a roughly equal-weighted portfolio and thereafter make changes to these based on the following factors. Overall fundamental performance of the stock is considered, which includes hundreds of well-researched factors. Aspects like market capitalization and average daily traded values are evaluated. The volatility of the stocks is considered to ensure that a few volatile stocks don’t end up dominating the overall portfolio performance. Diversification across industries and sectors is ensured. The portfolio does not rely on the traditional method of measuring sectoral risk where each stock is exclusively categorized into a particular sector or industry. Stocks can have non-zero sensitivities to multiple sectors. Unsupervised clustering algorithms identify such sensitivities and give us a truer picture of actual sectoral allocation.

This smallcase has a quarterly rebalance schedule. Once every quarter, the research team reviews this smallcase and realign the weights with the selected asset allocation strategy for the next quarter

FG-HUM Model

Portfolio of 25-30 stocks, based on FG’s Human + Machine Model, to simplify your equity investing.

FG-HUM Model

Overview

Stocks & Weights

At a Glance

Holdings Distribution