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Business News/ Money / Personal-finance/  Product crack: Angel Broking ARQ
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Product crack: Angel Broking ARQ

Focus is on asset allocation. Fund recommendations are based on quantitative research

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Angel Broking Ltd has launched a new investment service called ARQ, based on the principles of Nobel laureate Harry Markowitz’s modern portfolio theory. The logical engine behind ARQ uses these concepts to build you a diversified portfolio, based on your risk profile.

What’s on offer?

ARQ uses a model that assumes that for all efficient portfolios there has to be a mix of assets, and based on this it helps investors allocate to equity, debt and gold. If you are an Angel Broking client, you can go to https://arq.angelbroking.com and start using it; else you can sign up online too. While signing up, you will be asked questions about how much risk you are comfortable with, and an asset allocation recommendation will be suggested to you. And only after that, the products would be recommended. You can use this service to invest in stocks, equity mutual funds (MFs), debt mutual funds, and gold exchange-traded funds.

What works...

It focuses on asset allocation first, which is better than moving straight to products. When it comes to selecting funds, recommendations are based on quantitative research that has been done already; you don’t have to figure out which are the better-performing products. This product selection is driven by an pre-defined algorithm, and has no scope for the subjectivity of choosing a fund manager.

Clients can choose between equity and MF modules for final allocation. First-time investors should go for an MF-only allocation.

While signing up, answering the questions on risk will make you think about how much market volatility you are willing to accept. If you aren’t already a client, you can start within 60 minutes. This entails an Aadhaar-based know-your-customer (KYC) and demat account opening, all of which happens in an hour. Investors don’t have to pay any advisory fee for using the service.

You will get automated notifications around your holdings, and buy and sell recommendations.

...What doesn’t

Even for the most conservative risk takers—as determined by answers to the questions while signing up—who are willing to invest only for 2 years and don’t want the volatility that comes with equity, an allocation is suggested in equity MFs.

Also, annual changes in buy and sell recommendations by ARQ could confuse investors and lead them to making too many transactions. Although ARQ has kept to only funds and stocks thanks to the liquidity benefit, investors may be disappointed with the limited choice in debt products.

Ultimately, the merit of such a platform lies in the performance of a recommended portfolio, which can be verified only over time. This is a good option if you are looking for automated advice. If you need hand holding and regular information, hold out for offline advisers.

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Published: 07 Sep 2016, 08:28 PM IST
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