Dynamic Portfolio Management Service- one of its kind!
We, at Finwisor, are happy to offer Dynamic Portfolio Management Services in association with NJ Wealth. With minimal risk, the portfolio has been able to deliver good returns.
Portfolio Management services, in general, are high risk, high return products. However, I shall discuss below how this PMS service delivers good returns at a substantially lower risk.
One of its kind
The Dynamic PMS balances the equity and debt components based on the market valuation metrics like earnings growth, Price to Earnings multiple, etc. This is the only major PMS offering dynamic asset allocation.
PMS Options
There are 2 major dynamic asset allocation PMS available.
- Dynamic Stock Allocation Portfolio (DSAP) – In this option, strong companies are selected based on parameters like ROCE, ROE, Revenue Growth, Free Cash Flow and Loan book growth.
- Dynamic ETF Allocation Portfolio (DEAP) – In this option, a mixture of ETF Funds are taken and dynamically managed.
The debt component of PMS is kept in Arbitrage Funds to get the benefit of low equity taxation.
Note: Any combination of the above 2 can be taken to fulfill the SEBI mandated minimum investment criteria of ?25 Lakhs for Portfolio Management Services
Objective Asset Allocation Strategy
The asset allocation is based on objective valuation metrics. The field of behavioural finance has gone a long way in proving how humans aren’t rational. The behavioural biases of humans keep them from enjoying better results. Thus, the asset allocation criteria are kept objective to keep these biases at bay and optimise returns.
Risk
The financial risk may be measured in terms of volatility in returns (standard deviation). The standard deviation of the DSAP PMS is 1.86% for the last 5 years, while that of DEAP PMS is 1.97% compared to the Nifty 500 TRI which has a standard deviation of 4.03%. Thus, the dynamic PMS are substantially less risky than the broader markets.
Returns
The backtested rolling returns of the DSAP strategy are pretty impressive as seen below:
The returns shown above are post expenses (taken as 2% p.a.)
Cost
The cost structure is as follows:
- Upfront Fees: DSAP: up to 1%; DEAP: NIL
- Management Fees per annum:
- Exit Load: 2% if withdrawn in the first year. NIL after that
Minimum Investment
The minimum investment required is ?25.25 Lakhs.
Conclusion
This PMS is a great option for the following category of investors:
- Investors who are looking at generating decent returns at a lower risk.
- Investors for whom the PMS would amount to >30% of their Net Worth
- First time PMS investors
- Lumpsum investors who don't intend to time the market
Admittedly, this article is only an overview of the product. Those who are interested in the product may contact us.
Wishing you financial freedom!