Indian Momentum Space.
We had a pain point explained by 01 of our subscribers stating that different momentum smallcases have different start dates making it impossible to do an Apple 2 apple comparison on smallcase website.
If somebody wants to take Momentum Factor exposure, what should he buy.
MysticWealth has pride itself in being transparent and honest in its communication and performance from Day 1 and so we decided to ease that pain point by collating the data and start everyone at Rs 100 on our inception date (April 2017).
Here are the results.
You can View a Bigger chart via this link
A few hours after publishing this chart on Twitter, we received 3 emails from clients asking the reason of our "under-performance" and why they should not "switch".
Nobody ever said that Transparency and honesty would come cheap ;)
Jokes apart, This is what we wrote back.
My friend you are free to switch any time you wish. Mysticwealth prides itself in being honest and transparent from day 1. We infact, started our journey by trolling then famous TV analyst by showcasing his performance on an excel sheet exposing the charade of TV tips without accountability.
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Performance and honest comparison should be available to clients at all times.
As for performance, these are black boxes and are like any system, subject to randomness. If we run 1000 simulations of #MWM, the generated 1000 equity curves can have a difference of 20-40% between them.
To give you an example, if system misses Adani total gas or a Goa Cabon (which we did) just because you were full when signal came, will have meaningful impact to end result.
Another thing you need to keep in mind is the Investing Universe. Any product exposing itself to small(er) caps will have extra alpha. That size alpha shrinks and is NOT available if you start with even half decent size. #MWM has stringent filters reducing our investing universe.
Ideally, like in mutual funds, there should be market cap universe like segregation but both smallcase and momentum are new in India so will take time.
Couple of more rebuttals.
What about transaction costs:
A total of 90 trades are taken in an year. You can safely assume around 1% say 40k on a 40 lakh portfolio. Also, we do not include dividends in our returns and therefore both should cancel each other out.
Mutual funds have given 100% return this year without any churn, better tax.
If you want to compare, start them from the same date. The worse performer in our chart is Nifty 200 momentum 30 index . 90% of mutual funds cannot dream of touching that!!!
At MysticWealth, it is our endeavor to have clean, transparent products. Both MWM and MWV provide factor exposure that adds value to your asset allocation mix and when invested together , smoothens the equity curve.