NIFTYBEES investors check their stop-losses as it underperforms
18 Jan, 201913 min read
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RELIANCE ETF NIFTY BEES showed weakness on Friday. It lost -0.28% to close at 1138.33. It is currently trading +9% above it's 52 week low of 1036.78 and is down only -6% from it's 52 week high.
Buy-and-Hold investors in NIFTYBEES experienced a maximum drawdown of -3.44% over the last three months. It gained +6.24% during this up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals. The net profit from Long signals was +1.42%.
NIFTYBEES has been underperforming the NIFTY-50 index in recent time, after having outperformed till 10 Sep, 2018. Over the last 3 years and 1 month, NIFTYBEES outperformed the NIFTY-50 index on 61% days.
NIFTYBEES was profitable on 58% days in the last three months. During this time, it delivered on average +0.1% per day. It delivered it's best daily return of +2.05%, during this period, on Monday, 29 Oct, 2018. There was initially a bearish trend during this period which started on 20 Nov, 2018 and went on till 22 Nov, 2018. The trend delivered -1.7% losses to investors. This was followed by a bullish trend that started on 11 Dec, 2018 and ended on 19 Dec, 2018. This bullish trend delivered +4.17% to investors.
NIFTYBEES had 7 profitable and 5 loss making months over the last year. NIFTYBEES was profitable in more months than NIFTY-50 index. NIFTYBEES delivered +6.53% during it's best month (Jul 2018), which was lower than +6.56% delivered by NIFTY-50 index during it's best month - Jul 2018. NIFTYBEES had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Nov 2018 to Jan 2019) during which period it delivered +4.93%. It is interesting to note that both NIFTYBEES and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
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NIFTYBEES is becoming less volatile overall. In comparison, the NIFTY-50 index is seeing a fall in volatility. During the last three months, there was a significant fall in NIFTYBEES's volatility from 26 Dec, 2018 to 18 Jan, 2019. While there was a significant fall in the NIFTY-50 index's volatility from 31 Oct, 2018 to 5 Dec, 2018.
Advanced/professional short-term investors should note that NIFTYBEES has significant positive skewness in it's return distribution. This indicates that investors can expect NIFTYBEES to recover from drawdowns quickly. Which makes NIFTYBEES a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
NIFTY-50 index has more chance of extreme outcomes than NIFTYBEES. Therefore, NIFTY-50 must receive a lower allocation than NIFTYBEES in your portfolio. NIFTYBEES usually has shorter drawdown period than the NIFTY-50 index.
On a general note (since you are interested in NIFTYBEES), if you are an investor in TIDEWATER, you need to be extra careful (consider limiting your exposure or diversifying) as it is extremely unpredictable and therefore risky.
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