An up to 40 stock momentum strategy Mi40 is based on exclusively CNX500 stocks and it requires only a 5 minute monthly intervention by the user. This strategy, while it was running since long in my own account, was opened for client participation in Oct 2017. It has turned in a great quarter with a cumulated FY returns at +31.82% at end of Q3FY17 vs +14.79% for NSE50 and +18.71% for CNX500. Mi40 had closed Q2FY17 at +18.30% vs 6.70% and 7.57% for the indices.
The drawdown experienced in the current quarter was the maximum at mid November at 4.65%
The Mi40 strategy rejected the following stocks during the quarter
As may be evident, the churn has been extremely low with only 4 exits in a period of 3 months in a portfolio of nearly 40 stocks. The best gainers during Q3 has been JAICORP and MINDAINDS both of which have gained more than 50% within 12 weeks.
Mi40 is available as a profit share strategy that I advice on for a few large clients. The portfolio allocation of each such portfolio is north of INR 50 lacs to start with. The gains here are surely muted compared to the gains in our other strategy Mi25, but the lower volatility appeals to larger accounts where 15-20% type annualized gain is the desired long term returns and where minimum intervention is desired in a month. The long term average hold nature of Mi40 is likely to result in more than 30% of stocks achieving more than a 1 year hold period. Given that intervention needed is only once a month it may have a deeper than Mi50 drawdown in weak markets, yet the advantage of a slow and steady compounding strategy has its own attraction.
Disclaimer: I am myself heavily invested in all weekendinvesting strategies as well. All queries can be sent to email@example.com.