Portfolio Optimization is a process by which we identify the issues in your current stock portfolio, and we advise you on the changes you need to make to strengthen your portfolio based on your risk profile and investment preferences.

There are 4 stages in the optimization process

• Portfolio Review
• Choose the parameters for optimization
• Modifying Existing Portfolio
• Creating new portfolio

The approach is fully customizable, we will provide the optimal choices which you can modify

Your portfolio would be optimized to improve two key elements of your portfolio

• Stock Selection- we would help you to shift your portfolio from fundamentally weaker stock to stocks which are currently doing better across fundamental and technical parameters
• Portfolio Construction – we would assist you to correct the allocation issues in your portfolio so that you are not over or under diversified based on your chosen risk profile

Our first analysis is of the returns that you have generated in your portfolio. The return analysis helps you identify your portfolio actions which have contributed to your returns so far and which have been a drag for you.

The portfolio optimization process looks at your current holdings and suggests the modifications based on what you hold today.

Even though return analysis does not directly contribute to your portfolio optimization, it’s a good place to start.

Many times, we buy stocks and our portfolio gets created. We do not think how this one stock fits in tour overall portfolio.

In construction issues we identify

• If you are holding ideal number of stocks
• If you have tail stocks in your portfolio- these are the stocks where you have invested such a small amount that even if these stocks perform very well or very poorly it will not have any material impact on your portfolio
• If a large proportion of your portfolio is invested in a few stocks
• If a large proportion of your portfolio is invested in one sector
• If the quantity you hold of a stock may lead to liquidity issues when you want to sell

Stocks that you hold are the most important factor which will determine the future returns that you generate from your investments.

Our big data analysis run multiple more than 500 analysis daily across all 4000 companies and rates each stock over 4 key parameters of

• Quality: Long Term Fundamental Strength
• Valuation: Attractiveness of stock at current price and fundamentals
• Financial Trend: Latest Quarterly Result Performance
• Technicals: Price and Volume Trend

Risk profile is essential to know your mindset about your return expectations and your willingness to take risk. Higher the expectations, higher the risk you may take.

Based on your portfolio holdings, we pre-calculate your Portfolio’s risk profile and categorize each portfolio into 5 categories from high to low. The assessment is of your equity portfolio and not of your investment status.

You can modify your risk profile basis your expectations and we will help you optimize your portfolio accordingly

Portfolio risk categories

• Very Aggressive Risk Portfolios can do very well in rising markets but tend to fall equally hard when markets fall. In general, these can have very high concentration in terms of stocks and sectors and /or are mainly invested in the smaller stocks.
• Aggressive Risk Portfolios may generate returns higher than market returns, however, tend to fall more than the market when the markets fall. In general, these are concentrated portfolios and can have a large portion invested in small and micro-cap stocks.
• Moderate Risk Portfolios have a risk level closer to the broader market. These portfolios are generally diversified but also have a few small and micro-cap stocks to increase the potential return.
• Conservative Risk Portfolios are designed to take lower risk than broader market and hence may generate returns in line or lower than market but are much less volatile and may lose less when markets ae negative. These portfolios are generally well diversified across sectors and invested in High Quality Large and Mid-Cap stocks
• Very Conservative portfolios are generally constructed in order to minimise the risk. These portfolios generally have lower but relatively stable return profile and invest in a well-diversified manner across sectors and almost exclusively in High Quality Large caps companies.

We look at your past trading behaviour and your pattern of buying and selling stocks to arrive at 2 key factors

• Your average holing period across stocks
• Your annual churn rate of portfolio

Using these 2 key inputs we try to identify your investment preferences and accordingly guide you to the weightage that you must give to long term and near-term stock evaluation factors

Based on assessment of your transaction we preselect the factors that you should give higher importance to.

You can modify this choice to reflect your market outlook and we will help you optimize your portfolio accordingly

The changes are based on your selections of Risk Profile and Investment Preferences. You can find out the reason for suggested action on each stock by clicking on Stock Details in front of each stock

The suggestions are broken into 3 categories

• Hold: These are fundamentally strong companies where we feel you should continue to be invested in
• Review for Trimming: These stocks are fundamentally strong, but you have allocated more than the advised amount in these. We suggest that you partially reduce your holding in these stocks
• Review for Switching: These stocks are either fundamentally weak or do not fit your risk profile

You can drag and drop a stock from one category to another basis your judgement.

You can also modify the whole bucket by clicking on Edit button located next to the number of stocks identifier in the bucket

Please note by modifying the suggestion your portfolio may not be completely optimized

New market cap allocation for your portfolio is based on the stock actions that you have chosen on your current portfolio

We have mentioned the ideal allocations, but you can modify these based on your preferences

For each category we give you suggested stocks and the ideal number that you should add. You can choose from the available options basis your preferences

At the end of the process all the trades that you have chosen to do are mentioned. You can download a deal sheet of these and send to your broker for execution.

No. Since we do not have any way of knowing that you have executed these trades, you would have to update your transactions after you perform the transactions.

There isn’t a fixed interval for optimization. Once you create your portfolio, we do constantly update you on the key updates of your portfolio stocks. We recommend that you do optimize whenever there are any adverse changes in your portfolio stocks or at least once a month.

No, currently we help you optimize your existing portfolio and invested amount.

No, currently only your equity stock holdings is optimized.