Smartvalues is a digital portal where stock portfolios are created using a proprietary algo. The portfolios are based on themes such as infrastructure or market segments such as multicap. The portfolios comprise of equities and is suitable for subscribers who are looking to have equity exposure. Because the portfolios have equity exposure, the risk profile is high. The duration of the portfolios are long term with a duration of 2 to 3 years. They are suitable for those who are looking to invest inequities for the long term with a view to wealth creation.

All subscribers are required to complete a risk profile. Based on the responses to the risk profile, a risk score is determined for each client. The risk profile of the subscriber is matched with the risk profile of the portfolio to determine the suitability of the portfolio strategy. All portfolios are rated as high risk as they comprise of equities. The subscriber can choose between the different portfolios based on their preference.

Smartvalues is a differentiated way of investing in stocks. It allows subscribers to invest in the stocks using a state of the art algorithm, while retaining complete control of the investment process. So you enjoy the best of both worlds, you get expert professional advise and yet retain complete control of your account and investment process. The algorithm only gives the advise and it is upto the subscriber to accept the advise and execute the order or not act on it. The subscriber also retains custody of the assets as the stocks purchased will come to their dmat account. The costs are transparent and the subscriber pays only the subscription fees. The subscriber also has the convenience of transacting through his existing broking account ensuring that he is in control of his costs.

The main advantage of investing through smartvalues is that a subscriber is assisted in the investment journey by an algorithm that has been time tested and evaluated by professors at the Indian Institute of Management, Ahmedabad. Investing in the stock markets is a complicated business, made even more so with the 24 hour news cycle and social media. A very common solution is to invest through mutual funds or portfolio management services. Smartvalues also provides a solution to this by giving guidance in order to enable the subscriber to steadily navigate the market, and retain control of his account and his assets. This it does in a transparent manner. The subscriber also becomes the shareholder of the companies in his portfolio, enjoys dividend and other benefits of being a shareholder.

One of the reasons investors have difficulty investing in the stock markets is because the markets are asymmetrical. How are the markets asymmetrical? In two ways. First it is asymmetrical amongst stocks. So if you take the Nifty returns for any period, you will find that almost the entire returns would have come from less than 10% of the stocks. The rest of the 90% of stocks would have given negligible returns. There is another way in which stock returns are asymmetrical. Of the 10% of the stocks that contribute to the Nifty returns, 90% of those returns would have come in 10% of the days. This means that most of the time, stocks are not doing anything. This is the asymmetry. Since we have a bias for action, and this tendency is accentuated by the media, we have difficulty in dealing with this asymmetry.

The assymetry

One of the differentiating features of smartvalues pouches is the low churning. Our rebalances are very infrequent and because of this the churning in our portfolios is low. There are many benefits of low churning. Frequent trades results in increased brokerage and associated costs. So low churn results in cost saving. The more trades arise the more is the possibility of errors and slippages. Low churning also means that stocks in the portfolio are being held for a long period of time. This is beneficial as it exposes the portfolio to the compounding effect that is inherent in holding stocks for a long period of time. In addition, since we use momentum as a factor, the portfolio would likely be trended. This is the best way to make money. To buy the right stock and keep holding.

Research has shown that there are different factors that contribute to stock returns. The most common and recognized ones are value, size, quality, volatility and momentum. Value is a very common factor and most initiates into the stock market tends to gravitate toward this  factor. It is logical and is taught in most stock investing courses. But of course it is not the only factor that is common to stock returns. Arguably, the most successful stock investing factor is momentum. Momentum has historically been neglected but is gaining popularity recently. Smartvalues uses momentum exclusively to construct the pouches. Momentum is the rate of change of a stock’s price, and stocks that exhibit momentum in any direction are expected to continue the trend. So a stock that is on an uptrend is expected to continue to move up.

Alpha, which is a fancy word for outperformance, can be generated by only three methods. The first is by stock selection. If you have a method for selecting stocks that is superior and you are able to consistently find stocks that outperform, then you can generate alpha through this method. The second way of generating alpha is through market timing. If you have a technique for understanding the market, and are able to enter and exit the market at the correct turns, then you can generate alpha through this method. The third way of generating alpha is through arbitrage. Arbitrage by definition is a riskless trade and therefore does generate alpha. According to a study done by Professors at IIM Ahmedabad, “The broad observation is that the return for the portfolios are higher than the market in most cases with varying degree although they are often associated with higher risk as well. The fat tailed nature of the return are not systematically different from that of the market. Interestingly, temporal positive autocorrelation for brief periods appear in the return of stocks selected by the Smartvalues algorithm – a feature likely contributing to the returns.”

The fees associated with the smartvalues services are regulated by SEBI. SEBI mandates that fees for portfolios created by RIA’s has a cap of 2.5% of assets under advise. Fixed fees can also be charged with a cap on the overall fees of upto Rs  1,51,000   per annum.

All subscribers get access  to the portal and they can login and see the value and performance of their investments at any time. The performance of the portfolio is updated daily.

Safeguarding your personal and financial information is our top priority. We employ industry-leading security measures to ensure your data remains private and protected at all times.

All sensitive information is encrypted both at rest and in transit using advanced encryption standards. Access to your data is strictly limited to authorized personnel and is governed by robust role-based access controls. We also implement stringent internal policies and regularly audit our systems to maintain the highest standards of data security and compliance.

Your trust is important to us, and we are committed to maintaining the confidentiality and integrity of your information.

A subscriber can get started with smartvalues by registering on the portal. The credentials of the subscriber will be created and using the userid and password, the subscriber can login and complete the kyc and subscribe to the portfolios.