How It Works
This strategy picks just 5 liquid, high-momentum ETFs from the entire NSE Index universe. We check the momentum rankings every Thursday and share any buy or sell signals so you can act on Friday. It’s that simple and elegant.
But here’s the kicker – we’re not just stuck with Indian equity ETFs. If foreign ETFs like MON100 or HNGSNGBEES are showing strong momentum, we’ll jump in. Same goes for commodity ETFs like GOLDBEES or SILVERBEES. It’s like having a tactical allocation to whatever’s working globally.
The Science behind this ETF Model
I came across this interesting paper – How to Improve ETF Sector Momentum by Soหna Beluskยดa – Junior Quant Analyst, Quantpedia & Radovan Vojtko – CEO & Head of Research, Quantpedia
In this paper they talk about how to make Sector momentum ETFs work better. Thats exactly what we are attempting to do in this ETF portfolio.
To be honest this strategy has one limitation. You cannot deploy huge capital here. ETFs don’t have the same liquidity as individual stocks, so if you’re working with UHNI levels of money, you’ll hit liquidity walls if you try to execute it yourself. But then if you were UHNI you wont be reading this.
But then here’s the beauty of it, you get diversification across asset classes and geographies without having to think about it. When gold is hot, you’re in gold. When Hang Seng is flying, you’re there too. The momentum does the thinking for you.
The downside? Sometimes you’ll be in some random commodity ETF while everyone else is making money in defence stocks. But that’s the price of diversification.
The drawdowns have been relatively manageable at 20-25%. That means if you had 100 rupees, it would have become 75-80 rupees at the worst point. Not terrible, especially considering you’re getting exposure to multiple asset classes.
The 15-20% annual returns over 18 years are decent, though not as exciting as pure equity momentum strategies. However, remember that you’re getting smoother returns because you’re not putting all your eggs in one basket.
Who Should Consider This?
If you’re someone who wants momentum-based diversification across various asset classes including international exposure through ETFs, this could be a suitable option. It’s ideal for individuals who want to be strategic but don’t want to research foreign markets or commodities themselves.
Conclusion
This strategy is effective if you want a “set it and forget it” approach to global tactical allocation. The returns are steady rather than spectacular, and the drawdowns are manageable.
The weekly rebalancing keeps you in whatever asset class is working best globally. You might find yourself in Hong Kong stocks one month and silver the next, but that’s the point – you’re always where the momentum is.
It’s not going to make you rich quick, but it’ll give you consistent exposure to global opportunities without having to become an expert in everything.
How to invest?
Click on “View smallcase” button and follow through.
Investments in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
Reach out to us at info@sandeeprao.co for any clarifications.
