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Prabhudas Lilladher launches quant-based multi-asset portfolio management strategy

According to Prabhudas Lilladher, the portfolio will only invest via passive instruments--index funds and exchange traded funds--to eliminate stock selection, sector selection and style selection risks.Premium
According to Prabhudas Lilladher, the portfolio will only invest via passive instruments--index funds and exchange traded funds--to eliminate stock selection, sector selection and style selection risks.

  • The MADP will invest across seven asset classes including large-cap and mid-cap domestic equities, international equities, gold, government bonds, corporate bonds, and liquid funds

NEW DELHI: Financial advisor Prabhudas Lilladher Pvt Ltd has announced the launch of a first-of-its-kind multi-asset dynamic portfolio (MADP), which adopts a 100% quant-based tactical asset allocation strategy.

The MADP will invest across seven asset classes including large-cap and mid-cap domestic equities, international equities, gold, government bonds, corporate bonds and liquid funds.

According to Prabhudas Lilladher, the portfolio will only invest via passive instruments--index funds and exchange traded funds--to eliminate stock selection, sector selection and style selection risks.

Instead of keeping investments dormant in one asset class, MADP will look to ensure that the investor’s money is spread across multiple asset classes.

“Our MADP’s quant-based model and proprietary meters anticipate market cycles in advance. As a result, it rebalances the portfolio when an asset class is on the verge of a large inflection point. Such agile and dynamic allocation strategy protects investors’ capital in a down cycle and participates in an upcycle and hence generates superior returns. Global research shows that 91% returns are made by the right asset allocation, and not by timing the market or stock selection," said Amisha Vora, owner and Joint managing director, Prabhudas Lilladher.

According to Prabhudas Lilladher, having higher allocation in gold as compared to equities in 2019-20, would have given a much better overall return and protected against equity downside. While having higher allocation in equities in 2020-21, would have made the portfolio handsome returns. This is what MADP helps achieve through its asset allocation.

“Every asset class – be it equity, fixed income, precious commodities or real estate are guided by factors such as global liquidity, interest rates, oil prices, US dollar movement, global growth rates, etc. To determine the optimum weightage for each asset class in the portfolio, MADP relies on 9 proprietary meters that track over 100 such factors. The meters have been developed by Quantifi, PL’s specialized quantitative research and investment management arm," said Siddharth Vora, head, quant investment strategies and fund manager-PMS, Prabhudas Lilladher.

Prabhudas Lilladher’s MADP team includes a combination of financial experts, economists and tech experts – including market veteran Amisha Vora, fund manager Siddharth Vora and economist Ritika Chhabra (Quant Portfolio Strategist) – and a host of other CFAs, CAs and tech experts who spent over two years conducting extensive research and rigorous testing on developing this industry-first offering.

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