IVC investors re-evaluating their investment strategy
14 Dec, 201813 min read
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IL&FS INVESTMENT MANAGERS showed weakness today. It delivered 0.0% to close at 6.75. It's recent 5 day performance has been +3.85%, +9.24%, -0.83%, -5.51% and -3.79%.
IVC is currently in a bearish trend. Over the last three months trading short signals has not been a profitable strategy for IVC's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -32.5%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to IVC.
IVC has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 21 Dec, 2017 to 30 Nov, 2018. Over the last 2 years 11 months and 13 days, IVC underperformed the NIFTY-50 index on 56% days.
During the last three months IVC was mostly loss making and delivered on average -0.53% per day. It's best return during this period (of +10.0%) was on Wednesday, 3 Oct, 2018. While it's worst loss in the same period (of -16.0%) was on Friday, 21 Sep, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 24 Oct, 2018 and went on till 31 Oct, 2018. This bullish trend returned +20.25% to investors.
The last 12 months saw IVC's investors making profits in 3 months and incurring losses in 9 months. IVC was less consistent in delivering monthly returs than NIFTY-50 index. IVC was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -35.95% compared to -6.42% returned by NIFTY-50 index in Sep 2018. IVC had a longer winning streak of losing months than NIFTY-50 index. It went down in 4 straight months (from Aug 2018 to Nov 2018) during which period it delivered -69.91%. It is interesting to note that both IVC and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
Success seems to be connected with action. Successful people keep moving. They make mistakes, but they don't quit.
-- Conrad Hilton
IVC is currently seeing overall increase in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in IVC's volatility from 17 Sep, 2018 to 21 Nov, 2018. While there was a significant fall in the NIFTY-50 index's volatility from 21 Sep, 2018 to 5 Dec, 2018.
Advanced/professional short-term investors should note that IVC has significant negative skewness in it's return distribution. This indicates that IVC is very risky for short-term investment and can significantly underperform for long durations.
IVC has more chance of extreme outcomes than the NIFTY-50 index. Therefore, IVC must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than IVC.
Based on your interest in IVC you may find it interesting to know that ~MKTCAP201TO250 has shown remarkable performance and deserves to be on every investors' watchlist.
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