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Strategies

Our strategies have been devised not only to cater to a diverse range of requirements, but also to rid an active portfolio from human biases. This reduces errors on our part, and enables us to focus elsewhere. A simple discipline brought in can not only reduce volatility and enhance returns, but also reduces our dependence on any single person or institution. Our objective is to bring in that discipline, and focus on purely keeping all investment decisions unemotional and scientific.

Market Oriented

These strategies have been devised with an objective of deriving action recommendations basis the movement of the markets. If markets are extraordinarily volatile, such strategies might lead to more active management and vice versa. However for a broad understanding, these strategies will track your portfolio along with the markets on a daily basis and keep checking the originally decided parameters to ascertain if there needs to be a change in the portfolio.

Strategy 1: UNLIMITED UPSIDE LIMITED DOWNSIDE

This strategy is for those investors who want to take full advantage of any upward movement in the markets, but want to restrict their downside.

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Strategy 2: LIMITED UPSIDE LIMITED DOWNSIDE

This strategy is for those investors who want to periodically book their profits, thereby reducing the risk and volatility on the portfolio, at the same time restrict their downside. This is a variation of the above strategy in that the actions performed on achievement of the expected returns and maximum losses permissible are different from the actions for the above strategy.

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Asset Allocation

These strategies have been devised with an objective of easing the implementation of basic principles of long term investing. In reality most investors are aware of these strategies, but they lack the means of implementing the same. Here an investor decides to rebalance his/her portfolio basis a pre-decided allocation between multiple asset classes, and at a frequency which is pre-decided. Since it is highly improbable that all asset classes will grow at the same rate which will maintain the original allocation, it can be safely assumed that there would be transactions necessary in the frequency originally specified for the system to check the current allocations. Hence after passage of every such frequency, the strategy will recommend to you which asset classes to exit out of and to what extent, and which asset classes to enter and to what extent.


Strategy 1: CORE AND SATELLITE STRATEGY

In this strategy, a core is created from your investments. The core is then bifurcated into an index component and a debt component. The ratio between them is fixed as per your risk appetite and rebalanced every quarter or any other frequency desired. Here there is no involvement of judgment and as a result of pure asset allocation, you would always be selling higher and buying lower in the index. The balance portion is then invested as a satellite component in any higher beta asset class. Here the objective is to constantly monitor that also and any profits derived from this satellite portfolio are periodically transferred back into your core holding. The objective of the satellite is to better your returns by assuming a more risk for reward approach. This can be used for multiple risk reward scenarios as only the allocation ratios between debt and equity within the core component, and the allocation ratios between the core and satellite components will vary the inherent risk attached to the portfolio.


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Strategy 2: ASSET ALLOCATION STRATEGY

In this strategy, a pure asset allocation is devised for the overall portfolio. Basis the exposure the client wished to take across various asset classes; we add or remove asset classes. Once the different assets which need to be represented on the portfolio are ascertained, we look at the allocation across these. This is derived from the risk appetite, the horizon, and the liquidity requirements of the client. Once set, these parameters are checked in a pre-designated frequency. Also the allocation percentages are checked to ensure compliance. Any deviations, if any, are rectified and as the client matures over time, new asset classes may be introduced, or existing assets removed basis the overall financial plan of the client.


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Future Strategies

We are working on new ways of looking at investments and finding ways and means of giving them a simplistic approach which can be easily represented and implemented. As and when such ideas make it out of the drawing board, and stands a standard back testing simulation, and live testing for a quarter at least, we will bring these to you as well.

Meanwhile if you have an idea which you would like to share with us for the benefit of all fellow investors, we would like to hear from you on your thoughts. Please write to us at strategies@repairyourinvestments.com


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