Smart Portfolio

Profile

This is a computer managed investment plan, which allocates the investment in the ratio of 75:25 between PIF (debt fund) and PSM (equity fund). This plan regularly reallocates the portfolio back to the original ratio between debt and equity investments through automated adjustments, managed by our unique software. Switching takes place whenever the NAV prices of PIF and PSM record a change of 5% compared to each other from the original prices of investment or the new base prices.

Illustration

If at the time of investment, the NAV prices of PIF and PSM are Rs.50 and Rs.90 respectively, the adjustment will be made, say if PSM rises by 6% to Rs.95.4 and PIF rises by 1% to Rs.50.50.  Or in another example, PSM falls by 4% to Rs.86.40 and PIF rises by 1% to Rs.50.50. Each time the price change between the two NAVs reaches 5%, the adjustment is made and a new base price is created for future adjustments. If the relative weightage of PSM increases due to rising NAV in the booming stock market, the surplus is redeemed and invested in PIF and vice versa. Thus, in Smart Portfolio, the investment in stocks works on a simple premise of buy low and sell high, while eliminating human judgement of when to buy and sell. It cashes in the gains in PSM, when stock market rises and buys PSM when the stock market falls. Since PSM is an all equity investment fund and stock prices have the inherent characteristic of volatility as well as the potential of sharp gains and losses, therefore, in practice, the movement in PSM prices is the driving factor in the performance of the Smart Portfolio.

Performance

The performance chart shows that the Smart Portfolio has generated a total return of almost 19% during the past year with very little volatility. Major advantage of Smart Portfolio is that it enhances investors’ return during rising equity values and range bound (e.g. +10% or –10%) stock market conditions. On the flip side, in case of continuing one-way fall in PSM prices due to protracted bearish stock market conditions, Smart Portfolio might result in negative returns or lower returns in comparison with PIF.