Growth at a fair price - Asset Allocation Model
Windmill Capital
Growing companies available at fair valuations, along with diversification benefits of gold & debt
3Y CAGR
16.31%
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Daily Change
Today's change in this smallcase is
7Y CAGR
CAGR (Compounded Annual Growth Rate) indicates the average yearly return generated by a smallcase from the date of launch. Only live data is considered to calculate the CAGR. Thus, this smallcase has given returns on an average every year since Apr 4, 2016
High Volatility
Stock prices move up and down on a daily basis, resulting in fluctuating investment value. High volatility indicates high fluctuation is expected in the investment made in this smallcase
About the smallcase
This is an asset allocation version of the Growth at a Fair Price smallcase.
- The underlying theme of the smallcase mimics the pure equity version smallcase “Growth at a fair price”
- Generally, growth companies have a lot of investment opportunities to reinvest their earnings and not pay dividends. A robust business and rising earnings allow them to command high valuations
- But, everything has a fair price and irrespective of the quality of the product, one should never overpay. This rule is applicable in the case of growth companies as well
- Such companies are good investment opportunities, however, because of their high valuations, it is difficult to judge whether they are fairly priced
- Equity portion of this smallcase is a collection of companies experiencing earnings growth and witnessing margin improvement
- In addition, only the companies experiencing an increasing return on capital, and available at justifiable valuations are selected
- To reduce the risk of the smallcase, we include other asset classes like gold and debt as well which is not done in the original smallcase. Thus, this provides better risk-adjusted returns, especially during market turmoil
This smallcase is suitable for those who want the benefit of the “Growth at a fair price” smallcase strategy with added protection of asset allocation to safeguard against prolonged market downturns. This version of smallcase reduces fluctuation in portfolio value while providing a smooth wealth creation journey.
Methodology
Know how this smallcase was created
Methodology
universe
All publicly traded companies on the National Stock Exchange of India, covering 90% market capitalization, are included in the universe
research
- At Windmill Capital, our team cultivates investment philosophies rooted in cutting-edge academic research and insightful white papers. These resources lay the groundwork for a comprehensive understanding of market dynamics, risk management, and optimal return strategies. Subsequently, our sophisticated testing mechanisms allow us to create portfolios that are both theoretically robust and empirically validated.
- To further refine our models, we harness advanced mathematical, statistical, and analytical methods. These may include optimization algorithms that balance risk and return, as well as statistical analyses to uncover factor regimes and correlations. Such techniques enhance our stock selection process and portfolio weighting decisions, ensuring precision and effectiveness.
- This asset allocation version of the "Growth at a Fair Price" smallcase combines equity in growth companies at justifiable valuations with gold and cash to reduce risk, offering smoother, risk-adjusted returns and protection during market downturns.
stockScreening
- Stocks/ETFs qualifying the above mentioned research criteria are selected for further analysis
- Proprietary liquidity filters are applied to remove ill-liquid stocks/ETFs from this list
- A special check is further applied to remove stocks, where a significant part of the promoter holdings are pledged
- Stocks/ETFs are further removed on the basis of red flags such as their presence in ASM/GSM list of the exchanges, deep negative news or sentiment etc
weighting
This final list of selected stocks making part of the portfolio is equally weighted
rebalance
This smallcase has a weekly rebalance schedule. Once every week, the research team reviews this smallcase and realign the weights with the selected asset allocation strategy for the next week
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