This document provides a summary of a quantitative finance portfolio strategy called "Consistent Dividend Consistent Fundamentals" or CDCF. The strategy aims to outperform benchmarks during volatile markets by investing in a concentrated portfolio of stocks that demonstrate consistency in fundamentals like revenue, earnings, and profit margins as well as consistent dividend payments.
The summary describes the screening methodology used to select stocks for the portfolio, which evaluates companies over the past 3 years for growth in key financial metrics, consistent profit margins, low debt levels, and consistent dividend payments. The strategy is tested by backtesting portfolios of Canadian and Indian stocks. Results show the CDCF portfolios outperformed their respective benchmarks, indicating the strategy could generate alpha returns
Motilal Oswal Case Study in Switzerland financial magazine - Sep 2016South Asia Fast Track
1) Motilal Oswal Financial Services found itself needing to transform its business model in 2014 to improve its return on equity (ROE).
2) It focused on building four engines to drive sustainable ROE growth: 1) Returning to its core competence of active investing through new mutual funds. 2) Starting an affordable housing finance business, Aspire Home Finance, to deploy capital. 3) Committing its own capital to sponsor its asset management and private equity funds. 4) Restructuring its brokerage business to be more cost-efficient and focus on institutional clients.
This document discusses different approaches to valuation, including project valuation, asset valuation, liabilities valuation, earnings valuation, equity valuation, debt valuation, and firm valuation. It provides details on each approach, including what types of companies each approach is most suitable for. For example, asset valuation looks at tangible and intangible assets and is suitable for software, R&D, and holding companies, while debt valuation is appropriate for banks, infrastructure, construction, and capital-intensive industries. The document also provides key valuation formulas and definitions.
This document discusses financial leverage and its impact on stock returns in the textile sector of Pakistan from 2008 to 2012. It defines financial leverage as the extent to which a company's total capital is composed of debt. The objectives are to examine the possible effects of a firm's leverage on stock returns and analyze leverage's effect in the Pakistani textile sector over the 5-year period. Prior studies found that a firm's beta and equity return variability increase when it finances more with debt. The methodology involves collecting secondary annual data on stock prices and financial information of selected textile companies from sources like the Karachi Stock Exchange and analyzing the relationship between leverage and stock returns. The findings show leverage has a significantly positive effect on returns of high leverage
The document discusses working capital management. It defines working capital as the excess of current assets over current liabilities. It lists the key components of working capital like inventory, receivables, cash, and payables. It discusses different types of working capital and factors that determine working capital requirements like the nature of business, production cycle, and access to credit. The objectives of working capital management are to optimize current asset investments and ensure current liabilities can be met in a timely manner. Components of working capital management include inventory management, cash management, and receivables management.
This presentation provides an overview of valuation from an industry and deal perspective. It discusses how valuation is viewed as the perceived value agreeable to both buyer and seller based on negotiated terms and market scenario. Key factors that drive valuation are described, including business drivers, management, growth prospects, governance, and macroeconomic dynamics. Discounted cash flow is presented as a widely used valuation technique that calculates the present value of future free cash flows. The formula and methodology for discounted cash flow valuation are explained. The presentation concludes with information about Ourea Capital Advisors and the experience of Shrirang Tambe in providing advisory services related to business planning, fundraising, and mergers and acquisitions.
This document provides an overview of HDFC Mutual Fund and analyzes its risk and return. It is divided into three sections. The first section introduces mutual funds and HDFC AMC, discussing categories, strategies, organization, distribution channels, and HDFC's profile. The second section covers measuring performance through risk, return, portfolio analysis, and statistical measures. The third section details the study methodology, data collection and interpretation, findings, and conclusions from analyzing HDFC's performance using various risk-adjusted return measures.
This document discusses various methods for valuing equity, including balance sheet methods, discounted cash flow methods, and relative valuation methods. Balance sheet methods include book value, liquidation value, and replacement cost. Discounted cash flow methods include dividend discount models like the single period, multi-period, zero growth, constant growth, two stage growth, and H models. It also discusses free cash flow models. Relative valuation methods include price to earnings ratios, price to book value ratios, and price to sales ratios. The document provides formulas for calculating some of these methods.
Management of Working Capital- Britannia Industries Ltd.Nikita Jangid
The document discusses working capital and its management. It defines working capital as the capital required for financing day-to-day business operations. Shortage of working capital can cause business failures while sufficient working capital is important for business success and liquidity. The document also discusses different types of working capital like permanent working capital and temporary working capital. It outlines the goals of working capital management as ensuring sufficient cash flow and balancing current assets and liabilities. Key factors that determine working capital requirements include the nature of industry, sales volume, inventory and receivables turnover, and the production cycle.
Motilal Oswal Case Study in Switzerland financial magazine - Sep 2016South Asia Fast Track
1) Motilal Oswal Financial Services found itself needing to transform its business model in 2014 to improve its return on equity (ROE).
2) It focused on building four engines to drive sustainable ROE growth: 1) Returning to its core competence of active investing through new mutual funds. 2) Starting an affordable housing finance business, Aspire Home Finance, to deploy capital. 3) Committing its own capital to sponsor its asset management and private equity funds. 4) Restructuring its brokerage business to be more cost-efficient and focus on institutional clients.
This document discusses different approaches to valuation, including project valuation, asset valuation, liabilities valuation, earnings valuation, equity valuation, debt valuation, and firm valuation. It provides details on each approach, including what types of companies each approach is most suitable for. For example, asset valuation looks at tangible and intangible assets and is suitable for software, R&D, and holding companies, while debt valuation is appropriate for banks, infrastructure, construction, and capital-intensive industries. The document also provides key valuation formulas and definitions.
This document discusses financial leverage and its impact on stock returns in the textile sector of Pakistan from 2008 to 2012. It defines financial leverage as the extent to which a company's total capital is composed of debt. The objectives are to examine the possible effects of a firm's leverage on stock returns and analyze leverage's effect in the Pakistani textile sector over the 5-year period. Prior studies found that a firm's beta and equity return variability increase when it finances more with debt. The methodology involves collecting secondary annual data on stock prices and financial information of selected textile companies from sources like the Karachi Stock Exchange and analyzing the relationship between leverage and stock returns. The findings show leverage has a significantly positive effect on returns of high leverage
The document discusses working capital management. It defines working capital as the excess of current assets over current liabilities. It lists the key components of working capital like inventory, receivables, cash, and payables. It discusses different types of working capital and factors that determine working capital requirements like the nature of business, production cycle, and access to credit. The objectives of working capital management are to optimize current asset investments and ensure current liabilities can be met in a timely manner. Components of working capital management include inventory management, cash management, and receivables management.
This presentation provides an overview of valuation from an industry and deal perspective. It discusses how valuation is viewed as the perceived value agreeable to both buyer and seller based on negotiated terms and market scenario. Key factors that drive valuation are described, including business drivers, management, growth prospects, governance, and macroeconomic dynamics. Discounted cash flow is presented as a widely used valuation technique that calculates the present value of future free cash flows. The formula and methodology for discounted cash flow valuation are explained. The presentation concludes with information about Ourea Capital Advisors and the experience of Shrirang Tambe in providing advisory services related to business planning, fundraising, and mergers and acquisitions.
This document provides an overview of HDFC Mutual Fund and analyzes its risk and return. It is divided into three sections. The first section introduces mutual funds and HDFC AMC, discussing categories, strategies, organization, distribution channels, and HDFC's profile. The second section covers measuring performance through risk, return, portfolio analysis, and statistical measures. The third section details the study methodology, data collection and interpretation, findings, and conclusions from analyzing HDFC's performance using various risk-adjusted return measures.
This document discusses various methods for valuing equity, including balance sheet methods, discounted cash flow methods, and relative valuation methods. Balance sheet methods include book value, liquidation value, and replacement cost. Discounted cash flow methods include dividend discount models like the single period, multi-period, zero growth, constant growth, two stage growth, and H models. It also discusses free cash flow models. Relative valuation methods include price to earnings ratios, price to book value ratios, and price to sales ratios. The document provides formulas for calculating some of these methods.
Management of Working Capital- Britannia Industries Ltd.Nikita Jangid
The document discusses working capital and its management. It defines working capital as the capital required for financing day-to-day business operations. Shortage of working capital can cause business failures while sufficient working capital is important for business success and liquidity. The document also discusses different types of working capital like permanent working capital and temporary working capital. It outlines the goals of working capital management as ensuring sufficient cash flow and balancing current assets and liabilities. Key factors that determine working capital requirements include the nature of industry, sales volume, inventory and receivables turnover, and the production cycle.
Captive outsourcing models india tp hygiene workshop - finalbharath289
This document summarizes a presentation on captive outsourcing models from an Indian transfer pricing perspective. It discusses India's evolution as an outsourcing hub and the cost-plus pricing models traditionally used. It outlines viewpoints of Indian tax authorities, including emphasizing higher returns for captive centers and a skewness toward profit split methods. Key emerging decision variables are examined, like demonstrating lower risk profiles and the treatment of location savings and intangibles. Compensation techniques and appropriate transfer pricing methods are also addressed.
This document discusses financial management and provides an overview of funds flow statements. It defines financial management as dealing with the management of money matters. It also defines funds flow statements as statements that show the movement of funds and the sources and applications of funds for a business over a period of time. Funds flow statements are important as they help business owners and investors understand the incoming and outgoing cash flows of a business and assess its financial standing over time. The objectives of preparing funds flow statements are to analyze the movement of funds between balance sheet dates and identify changes in working capital elements.
This document discusses a study on working capital management at Sudha Agro Oil and Chemical Industries Limited in Samalkota, India. It provides background on the oil and chemical industry in India and the company. The methodology, objectives, and limitations of the study are described. The document outlines the various chapters that will analyze the company's working capital management based on its financial statements over the last 5 years. It aims to assess the company's financial position, profitability, and viability through financial ratio analysis and interpretation.
Working capital management ppt @ bec doms bagalkot mbaBabasab Patil
This document discusses working capital, which is defined as current assets minus current liabilities. It measures a company's liquid assets available to operate its business. The document outlines different components of working capital like inventory, accounts receivable, cash, and current liabilities like accounts payable. It also discusses the importance of managing working capital to ensure sufficient cash flow and meeting short-term obligations. Different approaches to determining a firm's working capital needs are discussed, including industry norms, economic modeling, and strategic choices based on a firm's specific business practices and goals.
This document provides a summary of a study on portfolio management at Motilal Oswal Financial Services Ltd. It includes an introduction, objectives, methodology, limitations and outlines of various chapters. The chapters will cover topics like literature review on portfolio theory developed by Harry Markowitz and others, company and industry profiles, theoretical analysis of portfolio management, findings, conclusions and suggestions. It will also include examples of different portfolio compositions. The objective is to understand how to effectively construct a portfolio and help investors select securities.
The document discusses working capital management. It defines working capital as the funds required for day-to-day operations of a business. Working capital includes current assets like inventory, accounts receivable, and cash. It is necessary for purchasing raw materials and paying daily expenses. Effective working capital management involves cash, receivables, payables, and inventory management. Both deficient and excessive working capital can pose dangers for a business.
This document discusses working capital management. It defines working capital as the capital required to finance short-term assets like cash, inventory, and receivables. It presents two concepts of working capital - the balance sheet concept, which is the excess of current assets over current liabilities, and the operating cycle concept, which involves the cash flows from purchasing inventory to collecting from sales. The document outlines factors that influence working capital needs and the risks of excess versus inadequate working capital. It also provides examples of estimating working capital requirements for trading and manufacturing businesses.
ppt on WORKING CAPITAL MANAGEMENT AT Silver Forge Pvt...jitharadharmesh
This document provides an analysis of the working capital management of Silver Forge Pvt. Ltd. over a four year period from 2009-10 to 2012-13. Key ratios such as the working capital turnover ratio, inventory turnover ratio, receivables turnover ratio, and current assets turnover ratio are calculated and interpreted. Liquidity ratios including the current ratio, quick ratio, and absolute liquid ratio are also analyzed. The analysis finds that the company's working capital and liquidity positions are generally strong, though inventory conversion periods and cash balances could be improved further. Recommendations include enhancing collection periods to reduce the net operating cycle and improving cash management.
This fund focuses on about 20 large cap stocks and has outperformed its benchmark, the S&P CNX Nifty Index, over multiple time periods since inception. The fund has a quality bias, preferring value stocks with strong cash flows from sectors like energy, financials, technology and healthcare. Notable holdings include Infosys, RIL, and ICICI Bank. The fund's concentrated, high-conviction approach has helped deliver strong returns, though increased risk.
Mutual fund is the better investment planProjects Kart
Mutual funds provide several benefits over other investment options such as banks deposits and stocks. They allow small investors to access a diversified portfolio of securities for a low cost. Mutual funds provide professional management, risk reduction through diversification, liquidity, and convenience. However, investors have little control over costs and cannot create tailored portfolios. The study aims to help new investors understand how to evaluate the risk and return of mutual funds and select appropriate schemes given the current economic environment of falling interest rates and volatile stock markets.
This document outlines key concepts related to working capital management. It discusses working capital basics like current assets and liabilities. It also covers topics like the cash conversion cycle, permanent vs temporary working capital, and factors that influence working capital needs. Additionally, it addresses the objectives of working capital management and trade-offs companies consider around inventory, cash, receivables and payables levels. Maintaining an optimal level of working capital is important to ensure liquidity while maximizing profitability.
The document discusses a case involving the sale of shares in offshore holding entities and the tax implications under the India-Mauritius tax treaty. It outlines the complex corporate structure and share transactions, and examines questions around the application of legal doctrines like piercing the corporate veil and the look through principle. The document also considers policy issues around indirect transfers and the role of courts in developing tax policy in the absence of clear legislation.
This document discusses the importance of working capital management for businesses. It defines working capital as current assets minus current liabilities. This includes items like inventory, accounts receivable, cash balances, accounts payable, accrued expenses, taxes payable and short term loans. Maintaining adequate working capital is important for businesses to ensure they have enough cash flow for daily operations and to pay upcoming bills. Poor working capital management can lead to overcapitalization or overtrading, which can threaten a business' survival. The document emphasizes the need to balance current assets and liabilities to minimize risk and maximize returns.
This document discusses the meaning and importance of working capital for businesses. It defines working capital as the capital required for financing short-term assets like inventory, cash, and debtors. There are two concepts of working capital - gross working capital, which is the total current assets, and net working capital, which is current assets minus current liabilities. The document outlines the key components of current assets and current liabilities. It emphasizes the importance of adequate working capital for business solvency, cash flow, and meeting short-term obligations. Both excessive and inadequate working capital can harm a business.
The document discusses various methods for valuing long-term securities such as bonds and stocks. It describes discounted cash flow models, which value assets based on the present value of expected future cash flows. For bonds, the models discount future coupon payments and maturity value. For stocks, models discount future dividends and terminal sale price. The dividend discount model and its constant growth variation are explained for valuing common stocks based on expected dividends.
A profile of venture capital in india b.v.raghunandanSVS College
1) Venture capital is a form of financing provided to early-stage, high-potential, and high-risk startups. It involves taking equity stakes and sometimes participating in management.
2) Venture capital funding is typically directed towards new companies, turnaround companies, and projects in high growth industries and sectors involving new technology. It carries high risk but also aims to generate high returns.
3) Venture capitalists typically take board seats and work closely with management over a long-term period of 5-7 years, helping with strategy and operations before exiting their investment through an IPO or acquisition.
This document discusses a descriptive study of mutual funds and investors' perceptions about investing in mutual funds. It provides an overview of the mutual fund industry and how mutual funds work. It discusses the different types of mutual funds and risks associated with them. The objectives and timeline of the study are outlined. Research methodology, sample design, data analysis and findings are presented. Limitations and scope for further study are also discussed along with recommendations. A sample questionnaire used for the study is included.
This document appears to be a collection of quotes and poems from various months between 2011-2012. It includes short passages about Halloween, Thanksgiving, winter, Valentine's Day, St. Patrick's Day, Easter, the 4th of July and reflections on life and death. The document also notes early release days and holidays with no school.
Captive outsourcing models india tp hygiene workshop - finalbharath289
This document summarizes a presentation on captive outsourcing models from an Indian transfer pricing perspective. It discusses India's evolution as an outsourcing hub and the cost-plus pricing models traditionally used. It outlines viewpoints of Indian tax authorities, including emphasizing higher returns for captive centers and a skewness toward profit split methods. Key emerging decision variables are examined, like demonstrating lower risk profiles and the treatment of location savings and intangibles. Compensation techniques and appropriate transfer pricing methods are also addressed.
This document discusses financial management and provides an overview of funds flow statements. It defines financial management as dealing with the management of money matters. It also defines funds flow statements as statements that show the movement of funds and the sources and applications of funds for a business over a period of time. Funds flow statements are important as they help business owners and investors understand the incoming and outgoing cash flows of a business and assess its financial standing over time. The objectives of preparing funds flow statements are to analyze the movement of funds between balance sheet dates and identify changes in working capital elements.
This document discusses a study on working capital management at Sudha Agro Oil and Chemical Industries Limited in Samalkota, India. It provides background on the oil and chemical industry in India and the company. The methodology, objectives, and limitations of the study are described. The document outlines the various chapters that will analyze the company's working capital management based on its financial statements over the last 5 years. It aims to assess the company's financial position, profitability, and viability through financial ratio analysis and interpretation.
Working capital management ppt @ bec doms bagalkot mbaBabasab Patil
This document discusses working capital, which is defined as current assets minus current liabilities. It measures a company's liquid assets available to operate its business. The document outlines different components of working capital like inventory, accounts receivable, cash, and current liabilities like accounts payable. It also discusses the importance of managing working capital to ensure sufficient cash flow and meeting short-term obligations. Different approaches to determining a firm's working capital needs are discussed, including industry norms, economic modeling, and strategic choices based on a firm's specific business practices and goals.
This document provides a summary of a study on portfolio management at Motilal Oswal Financial Services Ltd. It includes an introduction, objectives, methodology, limitations and outlines of various chapters. The chapters will cover topics like literature review on portfolio theory developed by Harry Markowitz and others, company and industry profiles, theoretical analysis of portfolio management, findings, conclusions and suggestions. It will also include examples of different portfolio compositions. The objective is to understand how to effectively construct a portfolio and help investors select securities.
The document discusses working capital management. It defines working capital as the funds required for day-to-day operations of a business. Working capital includes current assets like inventory, accounts receivable, and cash. It is necessary for purchasing raw materials and paying daily expenses. Effective working capital management involves cash, receivables, payables, and inventory management. Both deficient and excessive working capital can pose dangers for a business.
This document discusses working capital management. It defines working capital as the capital required to finance short-term assets like cash, inventory, and receivables. It presents two concepts of working capital - the balance sheet concept, which is the excess of current assets over current liabilities, and the operating cycle concept, which involves the cash flows from purchasing inventory to collecting from sales. The document outlines factors that influence working capital needs and the risks of excess versus inadequate working capital. It also provides examples of estimating working capital requirements for trading and manufacturing businesses.
ppt on WORKING CAPITAL MANAGEMENT AT Silver Forge Pvt...jitharadharmesh
This document provides an analysis of the working capital management of Silver Forge Pvt. Ltd. over a four year period from 2009-10 to 2012-13. Key ratios such as the working capital turnover ratio, inventory turnover ratio, receivables turnover ratio, and current assets turnover ratio are calculated and interpreted. Liquidity ratios including the current ratio, quick ratio, and absolute liquid ratio are also analyzed. The analysis finds that the company's working capital and liquidity positions are generally strong, though inventory conversion periods and cash balances could be improved further. Recommendations include enhancing collection periods to reduce the net operating cycle and improving cash management.
This fund focuses on about 20 large cap stocks and has outperformed its benchmark, the S&P CNX Nifty Index, over multiple time periods since inception. The fund has a quality bias, preferring value stocks with strong cash flows from sectors like energy, financials, technology and healthcare. Notable holdings include Infosys, RIL, and ICICI Bank. The fund's concentrated, high-conviction approach has helped deliver strong returns, though increased risk.
Mutual fund is the better investment planProjects Kart
Mutual funds provide several benefits over other investment options such as banks deposits and stocks. They allow small investors to access a diversified portfolio of securities for a low cost. Mutual funds provide professional management, risk reduction through diversification, liquidity, and convenience. However, investors have little control over costs and cannot create tailored portfolios. The study aims to help new investors understand how to evaluate the risk and return of mutual funds and select appropriate schemes given the current economic environment of falling interest rates and volatile stock markets.
This document outlines key concepts related to working capital management. It discusses working capital basics like current assets and liabilities. It also covers topics like the cash conversion cycle, permanent vs temporary working capital, and factors that influence working capital needs. Additionally, it addresses the objectives of working capital management and trade-offs companies consider around inventory, cash, receivables and payables levels. Maintaining an optimal level of working capital is important to ensure liquidity while maximizing profitability.
The document discusses a case involving the sale of shares in offshore holding entities and the tax implications under the India-Mauritius tax treaty. It outlines the complex corporate structure and share transactions, and examines questions around the application of legal doctrines like piercing the corporate veil and the look through principle. The document also considers policy issues around indirect transfers and the role of courts in developing tax policy in the absence of clear legislation.
This document discusses the importance of working capital management for businesses. It defines working capital as current assets minus current liabilities. This includes items like inventory, accounts receivable, cash balances, accounts payable, accrued expenses, taxes payable and short term loans. Maintaining adequate working capital is important for businesses to ensure they have enough cash flow for daily operations and to pay upcoming bills. Poor working capital management can lead to overcapitalization or overtrading, which can threaten a business' survival. The document emphasizes the need to balance current assets and liabilities to minimize risk and maximize returns.
This document discusses the meaning and importance of working capital for businesses. It defines working capital as the capital required for financing short-term assets like inventory, cash, and debtors. There are two concepts of working capital - gross working capital, which is the total current assets, and net working capital, which is current assets minus current liabilities. The document outlines the key components of current assets and current liabilities. It emphasizes the importance of adequate working capital for business solvency, cash flow, and meeting short-term obligations. Both excessive and inadequate working capital can harm a business.
The document discusses various methods for valuing long-term securities such as bonds and stocks. It describes discounted cash flow models, which value assets based on the present value of expected future cash flows. For bonds, the models discount future coupon payments and maturity value. For stocks, models discount future dividends and terminal sale price. The dividend discount model and its constant growth variation are explained for valuing common stocks based on expected dividends.
A profile of venture capital in india b.v.raghunandanSVS College
1) Venture capital is a form of financing provided to early-stage, high-potential, and high-risk startups. It involves taking equity stakes and sometimes participating in management.
2) Venture capital funding is typically directed towards new companies, turnaround companies, and projects in high growth industries and sectors involving new technology. It carries high risk but also aims to generate high returns.
3) Venture capitalists typically take board seats and work closely with management over a long-term period of 5-7 years, helping with strategy and operations before exiting their investment through an IPO or acquisition.
This document discusses a descriptive study of mutual funds and investors' perceptions about investing in mutual funds. It provides an overview of the mutual fund industry and how mutual funds work. It discusses the different types of mutual funds and risks associated with them. The objectives and timeline of the study are outlined. Research methodology, sample design, data analysis and findings are presented. Limitations and scope for further study are also discussed along with recommendations. A sample questionnaire used for the study is included.
This document appears to be a collection of quotes and poems from various months between 2011-2012. It includes short passages about Halloween, Thanksgiving, winter, Valentine's Day, St. Patrick's Day, Easter, the 4th of July and reflections on life and death. The document also notes early release days and holidays with no school.
Dokumen tersebut membahas tentang konsep rahmat dan nikmat dalam Islam. Rahmat didefinisikan sebagai nikmat yang diberikan Tuhan beserta ridho-Nya, sedangkan istidraj didefinisikan sebagai nikmat yang diberikan Tuhan beserta murka-Nya. Dibahas pula hikmah di balik rahmat dan akibat yang mungkin timbul dari istidraj. Ayat Al-Baqarah 212 juga dikutip sebagai rujukan.
Henrique Troitinho: 10 dicas para aumentar o ROI de suas campanhas de Links P...Rakuten Brasil
A empresa de tecnologia anunciou um novo smartphone com câmera aprimorada, tela maior e bateria de longa duração por um preço acessível. O dispositivo tem como objetivo atrair mais consumidores em mercados emergentes com suas especificações equilibradas e preço baixo. Analistas esperam que as melhorias e o preço baixo impulsionem as vendas do novo aparelho.
A working draft for the Final Project in the framework of "Art and Inquiry: Museum Teaching Strategies For Your Classroom" by Lisa Mazzola (March 2014) on Coursera learning platform.
MyVideoTalk is a powerful opportunity to start your own global internet business right from the comfort of your home or office, marketing the latest internet communication technologies.
Our compensation plan is designed so that you can earn career level income, our products are state-of-the-art - we're the first to market with the technology everybody needs.
That translates to huge opportunity for you.
El uso del portafolio para la autoevaluaciòn continua del profesor -Pujola...María Julia Bravo
Este documento presenta la propuesta del Portafolio Reflexivo del Profesor como una herramienta para la formación continua de profesores de español como lengua extranjera. El portafolio se basa en la práctica reflexiva, que implica que los profesores observen, reflexionen y mejoren sus propias prácticas docentes. El portafolio permite a los profesores establecer objetivos y evaluar su propio proceso de mejora profesional de manera autónoma y continua.
The document summarizes different types of Fehrer carding systems used to produce air-laid nonwoven webs. It describes the K-12 and K-21 machines, including their operating principles, specifications, applications and advantages. It also discusses recent developments like the V-12R machine, which can produce heavier weight webs at higher throughput for uses like insulation felts and automotive waddings.
The document provides information on relevant social media channels for journalism, including pros, cons, and recommended posting frequencies for platforms like Twitter, Facebook, Tumblr, YouTube, Pinterest, Storify, Flickr/Instagram. It also offers tips on encouraging participation, focusing content, and dealing with potential conflicts when moderating community responses on social media.
This document discusses learning analytics (LA) practices at the University of Technology Sydney (UTS). It describes UTS's goal of becoming a "data intensive university" to solve problems like student attrition, improve student engagement, enable personalized learning, and allocate resources more effectively. The university uses LA to identify "killer subjects" with high failure rates and understand factors contributing to student failure. UTS also utilizes a student dashboard in its learning management system and provides data literacy training for staff and students. The document is part of a larger OLT-commissioned research project examining LA practices across Australian universities and comparing them to international examples to develop best practice guidance.
Tourism Industry Association of the Yukon ConferenceJohn Gunter
On Friday, April 17 2015, at the TIAY conference in Dawson City, Yukon, I discussed our experience Building a Sustainable and Competitive Tourism Businesses in the North.
Andrea mallar's presentation on infection preventionAudreena
Andrea Mallar presented on infection prevention. She discussed how germs can be easily spread in places like doctors' offices and gyms. It is important to practice infection prevention through proper hand hygiene and cleaning of surfaces. Those at higher risk for infection include those with weak immune systems, diabetes, or lung disease. The most common pathogens that cause infection are bacteria and viruses. Healthcare-associated infections are a major issue, killing over 99,000 Americans annually. Proper hand hygiene, use of PPE, cleaning, and disinfection of medical equipment can help prevent the spread of infection. Similar prevention methods should be practiced at home as well.
This document discusses convertible bonds and the benefits of an absolute return approach to managing a convertible bonds fund. It notes that convertible bonds provide downside protection, equity-like upside, and lower volatility than equities. An absolute return fund allows isolating different drivers of returns in convertible bonds like equity, credit, volatility. This adds flexibility to benefit from these drivers while hedging unwanted risks. The fund aims to generate returns from both outright long positions and hedging strategies.
Many investors are searching for the “ideal” funds. These must not only fit specific investor requirements they also have to provide: Significant AuM (> 100 Mio.), high liquidity, best-in-class performance - ideally outperforming the market, low costs, experienced investment managers and last-but-not-least long and successful track records of minimum 3-5 years.
This approach of searching for the “holy grail” has been the standard paradigm for decades…and still is!
Unfortunately, the reality shows that most investment managers are not capable to outperform the market over a longer period, as a recent study from S&P Dow Jones Indices confirms*.
We suggest to consider a new investment paradigm, and show how this can work in practice…
This document discusses strategy management and operational excellence consulting. It provides an overview of key concepts like developing a vision and mission, conducting a SWOT analysis, selecting projects based on business cases, and measuring performance through a balanced scorecard. The goal of strategy management is to systematically plan for the future while avoiding rigidity. Key aspects include building competitive advantages, analyzing industry forces and benchmarks, and monitoring strategy implementation.
The Digital Transformation of Asset & Wealth ManagementKurt Harrison
The document discusses the challenges facing the asset and wealth management industry, including poor investment performance, investor preference for passive strategies and ETFs, pressure on trading and operations, the rise of robo-advisory, and increased regulatory requirements. It argues that asset managers will need to adapt by embracing quantitative strategies, passive products, digitization, and hiring staff with skills in areas like artificial intelligence, electronic trading, and digital client experiences. Regulations are also driving the need for more technology-oriented compliance officers.
[Case Study] Launching Innocent + Developing a new product for the teeth whit...Riri Kusumarani
Two chapters as group discussion. The first is about new product development for Teeth Whitening product. The second is about launching new product of Juice called Innocent. Group members : Tumenast Erdenbold,Edwin Opare and Riri Kusumarani.
This document is a project submitted by Raghav Aggarwal to Chitkara Business School in partial fulfillment of an MBA degree. It examines research conducted on equity mutual funds and learning advanced technical analysis patterns under the supervision of CA Aman Chugh of MarketConnected. The project aims to study whether mutual funds provide higher returns than directly investing in their top holdings over a 3-year period. It also aims to learn advanced technical analysis patterns to identify meaningful entry and exit levels in stocks. The methodology involves analyzing the returns of 4 mutual funds against the weighted returns of their top 10 holdings from 2013-2015. Technical patterns are also examined on actual market data. The conclusion compares the returns of investing directly in top holdings versus through
The document discusses the DSP Global Innovation Fund of Fund (GIF) which invests in innovation-themed businesses like 'Dominators', 'Enablers', and 'Disruptors'. It has recently added the Blackrock Global Fund - Next Generation Technology Fund, which holds 75% of its holdings in profitable companies, showing that innovation investing can include profitable firms. Valuations in the technology sector have corrected and approached average levels, making it a better time to consider active managers that may add fundamentally strong businesses. The fund recommends continuing SIP investments and top-ups in the volatile innovation theme for well-diversified, risk-adjusted exposure over the long run.
How Investment Analysis & Portfolio Management greatly focuses on portfolio c...QUESTJOURNAL
Abstract: Portfolio Construction is a capstone elective that draws on previously studied investment principles, theories and techniques. Its enable synthesize that acquired financial theories and knowledge in the context of portfolio construction and asset allocation. It focuses on gaps in theory and how they can be managed in practice.
This document discusses several questions regarding the tax implications of a C corporation converting to an S corporation status. Specifically:
1. The C corporation meets the eligibility requirements to elect S corporation status as it has both preferred and common stock with voting and nonvoting rights and fewer than 100 shareholders, one of which is a Swedish individual and another is a partnership.
2. All shareholders must consent to the S corporation election.
3. The election would not be valid if the C corporation did not meet all S corporation requirements in the election year.
4. The S corporation cannot keep its June 30 fiscal year without documenting a valid business purpose for the non-standard year end.
5. Upon converting to
There are plenty of concepts around identifying unfavorable financial market phases in order to early detect market crises. Just to name a few: Volatility, VaR/CVaR, Turbulence Indicators, Log Periodic Power Law Singularity, Sentiment Indices...and many, many more.
Even when these concepts are properly back-tested with historical time-series, we often have to conclude that there are several shortcomings in practice like: Lag, missing precision, missing exits and entries.
We suggest considering newer technologies, which are more mathematically advanced and nowadays available due to the abundance of computational capacity.
Modern Portfolio Theory (MPT) was developed in the 1950s and remains the standard approach used today. However, MPT makes unrealistic assumptions. HighTower|Scottsdale has developed an advanced "Liability Derived Intelligence" (LDintelligence) methodology that builds on MPT but addresses its limitations. LDintelligence begins by calculating each investor's "Liability Derived Index" based on their unique financial goals and risk tolerance. It then constructs customized portfolios aimed at achieving this target return while managing downside risk.
Global Equities The World has changed Whitepaper_v4Andy Gardner CFA
The document discusses how active investment management must change with the changing world. It notes that the drivers of market value have shifted from tangible to intangible assets, requiring a focus on bottom-up analysis of individual companies. It also discusses how information is now widely available, decreasing opportunities for alpha generation through research, while passive investments have grown. The document argues active managers must focus on long-term non-replicable research and engage with companies to understand intangible value drivers in order to justify their fees.
1. Samsung Engineering has created employee empowerment programs like "You Are CEO" where employees discuss business ideas and one acts as CEO for 30 minutes. This gives employees a sense of ownership and insight into their ideas and concerns.
2. Financial analysis can provide leads for strategy formulation, like identifying the breakeven point from ratios. Management must converge strategy with financial realities based on models like core competence determination.
3. There are different approaches to valuing a firm or its assets, such as liquidation value, going concern value, book value, and market value. A firm's value comes from present and future cash flows discounted by the cost of capital.
Gnosis Helio (version 5.0b)_local version.pptxJason Vu
This document provides an overview of Gnosis Partners, an organization focused on funding innovative infrastructure projects through a two-stage funding model. The first stage involves venture capital funding to develop infrastructure assets. Once income streams have stabilized, the assets are moved to an infrastructure fund. This returns the initial investment to venture capital investors and provides profits. The infrastructure fund then sells income streams to long-term investors. Gnosis Partners will focus on projects that are modular, scalable, profitable, and provide social/environmental benefits. They have identified several initial projects in areas like waste management, water purification, solar energy, and transportation.
Research report on affect of investment style on mutual fund performancePratap Kumar
This document provides an overview of a summer internship project report submitted to the Kejriwal Institute of Management & Development Studies. The report was completed by Pratap Kumar under the guidance of Prof. Athar Hussain Ansari. The report includes an acknowledgements section, table of contents, executive summary, and sections on the company profile, data analysis and interpretation, findings and conclusions. The project examines the impact of investment style on mutual fund performance. It provides background on mutual funds and their organization and workings. The report utilizes a questionnaire and analyzes the collected data to understand the terms, conditions and business strategies of leading stock broking companies.
Spend Analysis: What Your Data Is Telling You and Why It’s Worth ListeningSAP Ariba
Driving bottom-line savings continues to top the wish list of the chief procurement officer’s agenda, yet the decision path to get there often relies on perceptions and intuition. Without the right visibility into spend data, suppliers, or related market information in hand, sourcing and procurement decisions often run counter to the business objectives. Gaining comprehensive visibility is the stepping stone to effective spend management. Join this session where experts share their secrets on striking it rich by listening to what their spend numbers have to say.
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This document summarizes key aspects of fintech in India. It discusses how fintech combines technology with finance to provide more convenient, faster, and cheaper access to financial services. It notes that fintech innovation relies heavily on algorithms and data analytics. While fintech has impacted many financial segments, it has seen the most success in payments and transfers where many new platforms have launched mobile wallets and online payment options. Traditional banks and financial companies face challenges in fintech innovation due to outdated data systems and mindsets focused on people over technology.
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Sourajit Aiyer - GSCGI WealthGram, Switzerland - Earning Alpha at a Passive Cost, CDCF Experiment in Canada and India, Dec 2013
1. Gram
THE IFA’s
Wealth
LA TRIBUNE MENSUELLE
DES MEMBRES DU GSCGI
wealthgram@gscgi.ch
www.gscgi.ch
Vol. II
N°23 - Decembre 2013
QUANTITATIVE FINANCE
INVEST IN MATHEMATICS
Groupement Suisse des Conseils en Gestion Indépendants • www.gscgi.ch
2. Gram
THE IFA’s
Wealth
LA TRIBUNE MENSUELLE DES MEMBRES DU GSCGI
wealthgram@gscgi.ch • www.gscgi.ch
Vol. II - N° 23 - Decembre 2013
2
SOMMAIRE
3
Editorial
La supervision prudentielle ... dans un système de co-régulation
Pierre Christodoulidis, Président d’Honneur du GSCGI
4-5
Sponsor de Décembre 2013
Quantitative Finance: Invest in Mathematics
Meliora Capital SA, Membre du GSCGI
6-7
Les Membres du GSCGI
FECIF’s Chairman of the Board, Vincent J. Derudder, informs...
8-9
Placements & Techniques de Gestion Earning alpha at a passive cost!
Sourajit Aiyer, Mumbai, India
10-11
Juristes & Fiscalistes
Le nouveau tournant de la place financière suisse... –
Conférence Academy & Finance, article de Cosima F. Barone
12-13
L’Avis de l’Analyste
UNITY: The Free Will of the Egyptian People
Ron William, Director of SAMT, Geneva Chapter
various ...by Bern eXchange, Pierre Christodoulidis and Cosima F. Barone
In Globo
La Réunion Mensuelle du GSCGI
18
Book Review
14-15
16-17
19
Clin d’Oeil à l’Histoire
Calendrier Réunions Mensuelles
La Parole est à Vous
20
Sponsor de Décembre 2013
Nov. 8/Geneva: The end of Quantitative Easing...
Eurofin Capital SA, article by Cosima F. Barone
Crise Financière. Pourquoi les gouvernments ne font rien
de Jean-Michel Naulot
A 1987-type meltdown in the spring/2014 horizon?
Cosima F. Barone - FINARC SA
MELIORA CAPITAL SA – www.melioracapital.ch
Editeur: G S C G I
Secrétariat Général:
3, Rue du Vieux-Collège
Case Postale 3255
CH - 1211 Genève 3
Tél. +41 (0) 22 317 11 22
secretariat@gscgi.ch
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c/o Findling Grey AG - Tél. +41 (0) 43 819 4243
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Lugano: segreteria@gscgi.ch
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Viale S. Franscini 16, CH - 6900 Lugano
Advisory Committee Director,
Maquette & Réalisation:
Cosima F. Barone
www.finarc.ch
c.barone@finarc.ch
Groupement Suisse des Conseils en Gestion Indépendants • www.gscgi.ch
3. Gram Gram
THE IFA’s
Wealth
LA TRIBUNE MENSUELLE DES MEMBRES DU GSCGI
wealthgram@gscgi.ch • www.gscgi.ch
Vol. II - N° 23 - Decembre 2013
1
PLACEMENTS & TECHNIQUES DE GESTION
Earning alpha at a passive cost!
An experiment in an emerging and a developed market (Canada
and India). Developing a concentrated portfolio idea on
a ‘Consistent Dividend Consistent Fundamentals’ (CDCF)
theme to outperform the benchmarks during volatile equity
environment…
Article’s Flow
We start with (1) Introduction of the portfolio idea (to discuss
the central idea, validation methods conducted, for whom is
it relevant and idea’s conception/history). (2) Key Motives
behind this idea. (3) What is the CDCF theme. (4) Screening
methodology and Assumptions of the stock screening process.
We have used 2 validation methods for testing. (5) Conduct
NAV Back-testing and Scrip-Unit calculation as per 1st method
for initial validation, using the latest fiscal as base year. (6) Also
test it as per 2nd method for additional validation to check
whether the idea would actually have run over a period of time,
using a historic base year and churning the portfolio annually
up till the recent fiscal year. (7) Compare Results Achieved
for India/Canada from NAV back-testing to see whether our
portfolio actually delivers. We conclude with (8) Rationale - 8
USPs of this theme and (9) Risk Factors involved.
1. Introduction of the portfolio proposal
Equity investment exposure has long debated between aspects
like concentrated portfolios, diversified approach, beta, alpha,
fundamental or technical patterns to base decisions. Depending
on the market environment and investor’s risk-return appetite,
all approaches have their importance. But market factors are
ever-changing and impact companies’ financials and price trends,
more so during periods of volatility. During volatility, the high
fees paid for active management often eats into the potential
returns to the investor, posing a question on the rationale for
active management in the first place.
This experiment assimilates some of these concepts into a
concentrated portfolio idea based on a ‘Consistent Dividend
Consistent Fundamentals’ (CDCF) theme to see if it can
outperform benchmark indices during volatile equity environment,
without the need for high-level active management or the high
fee that it demands. In short, it attempts to earn alpha at a
comparatively lower cost of a passive product. This ‘Consistent
Dividend Consistent Fundamentals’ (CDCF) theme is based on
‘tracking the consistency in fundamental performance’. It uses
this consistency in financial and dividend performance of stocks
to develop criteria for a screening methodology which can beat
benchmark indices in volatile times, and thus become a lowcost substitute for what active managers would otherwise do to
generate alpha – research on individual companies by charging
a high cost.
The intention is to test whether a portfolio can generate only
alpha by paying that high cost for active managers, or whether a
portfolio can still earn alpha at a cost which is largely comparable
to passive products - by devising a screening criteria which is
defined and replicable, which aims to identify quality companies
whose price trends reflect the consistency in their fundamental
performance. Secondly, if this portfolio idea were to be converted
into a product, then this theme might be relevant to create a
differentiation in an otherwise crowded fund market. With
numerous funds in the market vying for investor dollars, why
would there be an interest for yet another product? In short, the
opportunity to gain alpha without paying the commensurate
high fee for active management through this ‘CDCF’ theme
might appeal to investors and readers alike.
Validation of the theme — 2 validation methods are used for the
screening/back-testing process. For initial validation, we test
using the latest fiscal year as base year - FY2013 for India and
CY2012 for Canada. For additional validation, the theme is
tested over a period of time to see if it would work had it been
operational. We assume the portfolio was incepted in FY2011/
CY2010 for India and Canada resp. (For India, FY2011 is the
initial base year and FY2012 and FY2013 are subsequent base
years after portfolio churning is done annually). Our idea uses
a developed and an emerging market (Toronto and Mumbai
exchanges) to test it across geographies.
For whom will it work and not work — This idea might be
a relevant for risk-averse investors who prefer dividend stocks
rather than growth stocks in volatile times, but still like to go for
alpha at minimal cost. It might be relevant for those willing to
invest in a theme that seeks alpha without undertaking research
into each stock separately (just for a satellite position in coresatellite portfolios), and for those unwilling to pay high fee for
active managers, hence prefer passive products. This idea might
not be relevant for risk-averse investors who do not want any
risk of downside that can come with an alpha objective. It may
not work for those who seek exposure into only large-cap stocks
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Vol. II - N° 23 - Decembre 2013
2
PLACEMENTS & TECHNIQUES DE GESTION
Earning alpha at a passive cost!
of certain sectors, because this criteria includes the larger midcaps as well and is sector-agnostic in nature.
stocks. The screening criteria tracks consistent performers to
identify quality stocks.
Do investors need an AMC/institution to get this portfolio, or can
they do it themselves since it is really built on a screening model —
One needs an institution’s help since the free screening models
available for investors does not cover the extensive number of
data metrics and criteria used here. Financials of companies
of the entire stock exchange universe are not so easily/freely
available either.
Without much need for active management, it can be a low-fee/lowcost option – hence ‘alpha approach at a passive cost’ — High fees
of active managers are pinching investors in volatile markets, a
reason why passive products have risen in popularity now. The
CDCF theme attempts to show alpha might be possible without
paying the commensurate high fee that active managers demand.
Since it does not require a critical level of active management, it
can entail a low fee, which is comparable to passive products
Conception/history of the idea — The initial thought was
provoked by Raamdeo Agrawal, Joint MD of Motilal Oswal
Financial Services, in his 2011 Annual Wealth Creation Study
where he stressed the importance of investing in dividend stocks.
I thought on further aspects that might appeal to investors over
and above dividends, and what might create a differentiation for
investors if this portfolio were actually a fund product. I worked
on the idea of using consistency in financial performance as a
substitute for active managers, which might be a lower-cost
alternative and help create investor appeal. I made my own
criteria for consistency in dividend/financial performance. This
article is Version 2 of this theme. Version 1 was made for India
initially in 2012 and published in IFA’s Wealthgram magazine
of Switzerland in August 2013. In Version 2, I have made
several changes in the screening criteria, hence the difference
in shortlisted stocks. I believe Version 2 has much betterquality companies than Version 1 since the criteria is now more
stringent, hence it is a better criteria for the CDCF theme. In
Version 2, I have included the Canadian case as well, in order to
compare the theme across markets.
Why can this idea fail? — It is based on a specific theme and its
screening criteria are based on this. The theme will run as long
as the economic conditions supporting this theme exist - a risk
with all thematic products. (Further risks are detailed in Risks
section).
2. Key motives behind developing this portfolio theme/
idea
To bring in the term ‘consistent’ into portfolio approaches as
a substitute for high-cost active management — The term
‘consistent’ has a certain reassuring tone, especially in volatile
markets. Stock-screening methodology developed for this
experiment assumes stringent criteria based on the consistency in
fundamental and dividend performance. This acts as a potential
substitute for active managers’ work, i.e. research on individual
Screening criteria is defined and is easily replicable, hence
‘modified-variant of active’ — The screening criteria are defined
and replicable for each period of portfolio churning. This is
evidenced by the 2 validation methods when the portfolio was
tested as of recent fiscal and when tested over a period of time.
This screening methodology aims to substitute high-caliber
active management to identify stock picks, hence can be really
described as ‘modified-variant of active’
Identifies quality stocks to gain upside from dividends and capital
appreciation and beat benchmarks, at similar levels of risk —
Generating alpha is tough in volatile times. Passive approach
also has a flipside, as benchmarks can be range-bound, not
trend-bound. The CDCF screening criteria aims to identify
good-quality companies which have demonstrated consistent
performance in their fundamentals which would be reflective in
its price trends, and thus gain from opportunities from dividend
and capital appreciation
Concentrated nature of the portfolio enhances potential for upside,
given screening is tracking quality stocks — While diversification
is advisable, stressed markets often negate upside opportunities
as other stocks dip. Concentrated quality stocks can achieve
upside...
Helps create product differentiation in an otherwise crowded fund
product market — The fund universe is full of ‘me-too’ products,
which are duplicative. The attempt is to create a differentiation
which managers can use while pitching to clients, were this a
product.
3. What is the “CDCF” theme
What are the aspects that can be ‘consistent’ in stocks which can
enable substituting in-depth research with our screening criteria?
Despite the headwinds, some management teams have delivered
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‘consistent’ growth in their financial metrics despite challenging
environments. They have grown their topline and bottomline
consistently and maintained ‘consistency’ in profit margins
earned. Secondly, volatile price trends may not always reward
shareholders by capital appreciation as investors may not always
liquidate at opportune times, missing opportunities to book
gains. But some stocks have paid out dividends ‘consistently’
to reward shareholders. Lastly, stocks with low leverage have
further headroom for expansion, if needed, to enhance growth
and maintain its ‘consistent’ fundamental track record. These
aspects are used to develop on the ‘consistent’ theme of the
screening criteria of our CDCF theme. Thus, this ‘Consistent
Dividend Consistent Fundamental’ portfolio idea is based on
the premise of investing in a concentrated portfolio of consistent
dividend paying stocks which achieved consistency in their
fundamental performance at low leverage in recent years. It
believes this can be a low-cost substitute for active managers
in volatile times when paying higher fund cost pinches. The
screening criteria seeks to identify good quality companies
who took good management decisions, without the need for
researching into each stock separately. It screens the universe
of listed Indian scrips from the Bombay Stock Exchange and
the universe of listed Canadian scrips from the Toronto Stock
Exchange for testing in Indian and Canadian contexts.
4. Stock screening methodology and assumptions used
The screening methodology seeks stocks which have delivered
growth over the past 3 rolling fiscal years in Revenues,
EBITDA, PAT; maintained consistency in Profit Margins;
have low Debt Equity ratios; and rewarded shareholders with
consistent Dividends. Month of fiscal year-end of companies
differ. Hence, all companies with year-end within a particular
fiscal year (FY) period are clubbed within that FY itself (Fiscal
Year is assumed to be Apr to Mar for India and on calendar year ‘CY’
basis for Canada).
• Annual financial data of the companies is taken till CY2012
for Canada and till FY2013 for India, since these are the latest
fiscal for which financials are available. The underlyings’ data
will remain as such till the next fiscal year’s financials are
available. That is when underlyings will change and portfolio
churn will happen. Databases used were Capitaline for India
and Bloomberg for Canada.
• Data is taken for screening purposes for last 3 rolling fiscal
years, i.e. if the base year is FY2013 in India, then we used
annual financial data from FY2011 onwards. If the base year
is CY2012 in Canada, then we used annual data from CY2010
onwards.
• Scrips with market cap of more than INR 1000 crores as of
Mar 2013/Jun 2013 (1 crore = 10 million or 100 crore = 1 billion)
for India and CAD 800 million as of Dec 2012/Jun 2013 for
Canada. This might be on the lower side, however it is still
within the acceptable limits of the mid/small-cap universe.
Market cap of some holdings of prominent small-cap funds are
at even lower levels.
• We select stocks which showed revenue growth in the last 3
rolling years of over the average inflation rate (in last 1, 2, 3
year CAGRs). We use inflation as the threshold for growth in
topline on the assumption that it may reflect, or at least give some
indication, of the growth of its actual business volumes within
its revenues. The reasoning is it might have been able to pass on
most of the effects of inflation from its suppliers on to its buyers,
in effect increasing revenues commensurately. Actual volume
is a truer indicator of fundamental growth of the company’s
inherent business, rather than just the price effect. Hence, the
screening methodology tracks those which achieved growth
over and above the average inflation. A critic may debate that
a company could have increased its prices higher than inflation
or many quality companies might not have been able to pass it
on fully to buyers, hence this assumption may not mean volume
growth always. While this argument might be true, we assume
such instances might be very few in number.
• This growth rate/inflation assumption is repeated for tracking the
consistency in growth in operating profits and net profits as well.
• The stress here is on profit margins, since profitability is a key
metric stressed on. Assuming profits to have grown at similar
rates to the top line, we believe that the company has successfully
achieved consistent margins during the previous 3 fiscals. Basic
threshold level for profitability for companies which achieved
profit margins of at least 10% in each of the previous 3 fiscals.
• We target dividend payout of over 20% and dividend yield of
over 1% consistently in each of the last 3 FYs. 1% yield seems
low, but Indian companies do not really have any clear dividend
policy and dividend payouts are very low. The average dividend
payout in India is comparatively lower. Though, our yardstick
selects the above-average ones, we have had to assume a lower
threshold for dividends. However, the stress here is really on the
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consistency of paying dividends, rather than absolute threshold.
• We target debt:equity ratio of less than 2x, which allows them
headroom to raise future capitalization in case that is required
for enhancing top line growth and thus, maintain their overall
growth track record going forward.
• ROE (return on equity) track record consistently of at least
10% in recent years.
5. Scrip units and NAV back testing calculated for India/
Canada for intitial valuation (*Using FY2013 as base year for India
and CY2012 for Canada)
Weights and scrip units are calculated on a quarterly basis to
conduct NAV back-testing on every quarter-end from Dec
2008 onwards.
• Post stock-screening, weights are assigned as per equal-weight
method. The experiment is based on the consistency of their
performance, rather than their size. The basis for choosing
equal-weight rather than free-float weight is to give each of
these stocks equal chance to boost the overall NAV. Some of
the smaller underlyings might have performed just as well as
larger companies. Even using free-float weights would have
required a natural upper limit of upto its equal-weight since the
number of stocks in this concentrated basket is less. Hence,
even free-float weights would have ultimately ended very close
to equal-weights only.
• We start the back-testing phase from Dec 2008 onwards using
the Starting NAV as 100.
• Scrip units as of any quarter-end are rebalanced based on the
weights as of that quarter-end, current prices of the underlyings
and the NAV that was calculated for that quarter-end. This
NAV was calculated based on scrip units rebalanced as of the
previous quarter-end. Following the rebalancing of the scrip
units as of the current quarter-end, it will be factored with next
quarter-end’s prices to calculate next quarter-end’s NAV. Scrip
units and NAV calculations are based assuming 1 unit of the
portfolio basket (hence the scrip units per individual underlying
might be in Sub-1 decimal levels).
• These NAVs calculated are the ‘Price-based NAVs’ as they are
based only on price factor. Adding dividends to this gives us
Gross NAV.
• All dividends paid on the scrips are assumed to be done in
final quarter only (Mar for India and Dec for Canada), hence the
impact of dividends received will be seen in last quarter’s NAV
only (relevant only for QoQ NAVs).
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• Price-based NAVs are used to compare to normal values of
indices, not Total Return values, since we are assuming in this
experiment that dividends are distributed off and not retained to
purchase further units. Price-based NAV of Canadian CDCF
basket is compared to normal values of TSX indices. Price NAV
of Indian CDCF basket is compared with price-based values of
NSE indices.
• We have also included ‘Equal-Weighted Indices’ of TSX and
NSE in our comparison in line with our method of using equalweights in scrip-unit calculation, apart from large-cap, small-
cap and composites. (*That is why we used NSE indices in India,
not BSE indices).
6. Scrip units and NAV back testing for additional valuation, to test the theme over a period of time had it been
an operating portfolio ((*Using FY2011/CY2010 as initial base years
for India/Canada, and subsequently using FY2012/CY2011 and FY2013/
CY2012 as base years after portfolio churning is done annually)
• Methodology for screening, scrip units and NAV back-testing
remains same as seen in the earlier section.
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• What changes is the initial base year used and rolling years for
back-testing. Two validation methods are used for the screening/back-testing process. For initial validation in the previous
section, we had used FY2013 as base year for India and CY2012
for Canada. In this section, the theme is now tested over a period of time for additional validation, to see if it would actually
work over a longer period of time had it already been an operational portfolio
• For India’s case, we assume the portfolio was incepted in
FY2011. Thus, we start with FY2011 as the initial base year
and screen financial data for previous 3 rolling years, i.e. from
FY2008 onwards. Thereafter, we use FY2012 and FY2013 as
subsequent base years once portfolio churning is done each year
using the new set of annual financial data (Methodology section churning as per annual financial data). Underlyings change during each churn to comprise those which meet the criteria as of
that specific base year. We test with this new set of underlyings
for the 3 rolling years accordingly.
• As per India’s chart, 20 stocks were selected when the portfolio was incepted in FY2011 (Dabur to Sun TV Network). In
FY2012, only 10 companies were retained (Dabur to Engineers)
and also 5 new were added (HCL to Oil India). In FY2013,
only 5 were retained from the original FY2011 basket (Dabur to
eClerx). Also, 6 new were added (Crisil to Torrent) for FY2013.
• For Canada’s case, we assume the portfolio was incepted in
CY2010. So, CY2010 is the initial base year and screens data
from CY2007 onwards. Subsequently, CY2011 and CY2012
are used as base years once portfolio churn is effected with the
new set of annual financial data.
• As per Canada’s chart, 4 stocks were selected when the portfolio was incepted in CY2010 (Morguard to RioCan). In CY2011,
4 new stocks came in the list and none retained from CY2010
(Allied to Canadian Nat Railway). In CY2012, a total of 9 stocks
were shortlisted. This included all the 4 stocks from CY2011,
1 from CY2010 (Morguard), as well as 4 new stocks (Canadian
Utilities to BCE).
• Interesting observation here – The number of shortlisted
stocks is reducing each year in India while it is increasing in
Canada. This is because the stringent screening criteria are kept
fixed across all base years, while the actual economic/corporate
performance might have varied year on year.
In India, the corporate earnings environment has seen severe
stress over the last year owing to macro and policy challenges,
which is evident from the sluggish earnings growth the Indian
markets have seen since 2012. Canada, as with many Western countries, is actually getting back on the track of economic
recovery since the last year. Hence, corporate performance is
reflecting that. This might be why we have seen the number
of shortlisted companies reduce in India in the last one year
as stress grips the markets, while a move towards recovery in
Canada in the last one year has led to more companies making
the bar.
It just goes to show how few companies actually make the stringent criteria set in this experiment, which aims to use this criteria as a low-cost substitute for extensive research that active
managers otherwise do at a higher cost. Once, the macro and
policy environment improves and gets reflected in corporate
performance, more number of companies will get shortlisted in
India.
• An obvious argument here is - What is the worst-case scenario, if the screening during a portfolio churn period does not
yield any shortlisted companies? What does the CDCF portfolio do then? It does exactly what active fund managers do during such phases when they do not find good-quality, opportune
stocks to invest in. (1) They either HOLD on to their existing
portfolio since that is the next best alternative available, or (2)
They relax their stringency criteria a bit in terms of the quality
bar if the overall market conditions indicate that. Either way, in
a worst-case scenario, the CDCF portfolio will retain its existing holdings since those were quality stocks nevertheless, or it
would relax the stringency of its criteria metrics, which is easily
doable in the system.
7. Comparing CDCF portoflio’s results with benchmarks
• Delivered outperformance in terms of annualized return for the
entire back-testing period (from Dec 2008 to Sep 2013) over each
of the indices taken in both the Indian and Canadian cases
• Delivered this outperformance at similar levels of volatility in
both India and Canada - CDCF’s annual standard deviation for
the period is similar to large-cap index in both countries, while
it is lower than the midcap/small cap and composite indices
• On a YoY annual basis (FY14YTD, FY13, FY12, FY11 and
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FY10 for India and CY13YTD, CY12, CY11, CY10, CY09 for
Canada), it delivered positive excess returns in each of the
annual periods in both India and Canada, with the only a few
exceptions seen in the initial years (During FY10 in India against
midcap and equal weighted indices, and during CY10 in Canada
against smallcap and equal weighted indices. However, in Canada’s
case, CY09 saw negative excess returns against all the indices)
• Sharpe ratio has been higher in the CDCF basket for both
India and Canada, as compared to each of the indices used
• Delivered significant Alpha over all the benchmark indices
used based on annualized returns and beta for the entire backtesting period (from Dec 2008 to Sep 2013) in both India and
Canada
• Quarterly returns across the back-testing period shows the
CDCF basket has delivered positive excess returns in approx
70-80% of the quarters against each of the indices in India. The
same observation was about 60-70% of the quarters in Canada
• The Indian basket has also performed better as compared
to some of the Dividend Yield Mutual Funds (*shown in
Appendix)
8. Rationale behind the CDCF idea - 8 USPs
— ‘Consistency’ theme is USP 1 – to use the ‘consistency in
performance’ as a substitute for high-cost active management.
With a stringent screening criteria based on consistency in
fundamental and dividend performance, the shortlisted stocks
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are good-quality which have shown ‘shareholder friendly results’.
This acts as a substitute for active managers’ high-cost research
on individual stocks
— Low-fee/low-cost option if it were a fund – USP 2. The
screening methodology attempts to show earning alpha might
be possible without critical active management and paying
the commensurate high fee that active managers demand for
researching into each stock separately. The consistency criteria
in performance is expected to substitute for that research activity,
hence this basket can be maintained at a lower fee which is
comparable to passive ETFs – hence, an alpha approach at a
passive cost
— Screening criteria are defined and replicable for each period
of portfolio churning – USP 3. Criteria are replicable for each
period of portfolio churn and don’t need high-caliber active
management, hence ‘modified-variant of active’. This is seen in
the 2 validation methods when the portfolio was tested as of
recent fiscal and when tested over a period of time
— Attempts to deliver ‘better returns than benchmarks’ via
dividend and appreciation – its USP 4. Screening criteria
identifies quality stocks that have a consistent performance
record which would be reflective in its price trend. It gives scope
to gain from capital appreciation, as well as dividends (ideally
a safer option in volatile markets). Passive approach might not
always work in volatile markets if it is range-bound. Dividends
help to largely recover the initial investment, and appreciation is
the additional upside
— Concentrated nature enhances potential for upside, given
the screening methodology is tracking quality stocks – USP
5. Markets in stress might not always benefit excessive
diversification it it often negates upside opportunities as other
stocks dip. Concentration of quality stocks can help achieve
this upside. Tracking quality stocks brings the stock-specific
story into play
— Better sharpe ratio is its USP 6. It delivers better annualized
returns than benchmarks at similar levels of standard deviation
as compared to benchmarks. Hence, chasing alpha need not
mean incurring a higher degree of risk
— The theme can be relevant across geographies – USP 7.
India and Canada are different in terms of development and
maturity
— Useful for ‘Core-Satellite’ allocation or to create Product
Differentiation if this was a fund product – USP 8. This might
be relevant for ‘modified-active’ satellite strategies supporting
the beta-chasing passive Core. Also, the theme can help create
some differentiation while pitching to investors were this a fund
product, in an otherwise crowded fund product market.
9. Risk factors of the CDCF idea
• Screening criteria is based on a specific theme and will run
as long as economic and market conditions supports this basic
theme
• Timely data collection is an issue, since there would be a lag
when financials are made public as compared to fiscal year enddate
• Screening criteria loses out on high dividend-yield companies
whose recent financial performance may have taken a beating
• Sector exposure within the portfolio is often skewed towards
few sectors instead of spread over across many sectors
• Portfolio churning is done only once a year given the usage of
annual data, hence impact cost may need to be factored in
• Updating financials on an annual basis may ignore shifts in
financial performance that may be visible if done on a quarterly
basis
• Does not factor in valuation multiples of the underlyings
• Does not study the macro level factors impacting the economy,
sectors and companies the way active managers would do
10. Conclusion
Every investment faces a challenge in delivering consistent outperformance, more so when the inherent market volatility makes
it a struggle to beat inflation – touted as investors’ biggest enemy
by leading market gurus. The premise behind this concentrated
portfolio based on the CDCF theme was to highlight
that it can outperform benchmark indices during volatile
equity environment, without the need for high-level active
management or high fee, and thus become a low-cost substitute
for what active managers would otherwise do to generate alpha
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– research on individual companies by charging a high cost.
The screening criterion devised is defined and replicable, which
aims to identify quality companies by ‘tracking the consistency
in fundamental and dividend performance’. In short, to show
that such a theme based can yet throw up opportunities for
out-performance in the current volatile world of equities, at a
comparatively lower cost of a passive product. The opportunity
to gain alpha without paying the commensurate high fee for
active management through this ‘CDCF’ theme might appeal
to investors and readers alike.
Sourajit AIYER
sourajitaiyer@gmail.com
Acknowledgement:
The author would like to thank Mr Vivek Sinha for his insights on the scrip-unit construction
methodology.
This is a project made in personal capacity.
Views and ideas expressed are author’s own and are not to be taken to represent those of the company.
This article is purely an academic exercise only.
Any action taken by you is your responsibility alone.
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...appendix tables...
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...appendix tables...
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...appendix tables...
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