Exchange Traded Funds showed marginal outperformance on Friday. It fell by -0.44% to close at 1220.11. On a day when the overall market breadth was 71%, it closed higher than 41% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.
~ETF showed a bullish trend over the last 3 months. During this period ~ETF increased by +8.15% . There was a long signal during this period which returned +7.64%.
~ETF has been outperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 15 Nov, 2016 to 28 Aug, 2018. Over the last 3 years and 14 days, ~ETF underperformed the NIFTY-50 index on 48% days. Which indicates that on days ~ETF underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.
During the last three months ~ETF was mostly profitable and delivered on average +0.13% per day. It's best return during this period (of +1.78%) was on Monday, 29 Oct, 2018. While it's worst loss in the same period (of -1.13%) was on Tuesday, 23 Oct, 2018. The longest stort-term trend during this period was 8 profitable days, which started on 11 Dec, 2018 and went on till 20 Dec, 2018. This bullish trend returned +4.37% to investors.
During the last year ~ETF had 9 profitable months and 3 loss making months. ~ETF returned profits in more months than NIFTY-50 index. ~ETF was also a less risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -5.92% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ~ETF had a longer winning streak of profitable months than NIFTY-50 index. It went up in 5 straight months (from Apr 2018 to Aug 2018) during which period it delivered +9.38%. It is interesting to note that both ~ETF and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
If you totally want to reduce risk, take no risk. Bury the money. Then you've got no risk at all.
-- Don Connelly
~ETF is currently seeing overall fall in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in ~ETF's volatility from 29 Oct, 2018 to 15 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 ~ETF has significant positive skewness in it's return distribution. This indicates that investors can expect ~ETF to recover from drawdowns quickly. Which makes ~ETF 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 ~ETF. Therefore, NIFTY-50 must receive a lower allocation than ~ETF in your portfolio. ~ETF usually has shorter drawdown period than the NIFTY-50 index.
Based on your interest in ~ETF you may find it interesting to know that NIFTY50-DIV-POINT is highly volatile and investors investing in it must take extreme caution. Consider either reducing your exposure to NIFTY50-DIV-POINT or sufficiently diversifying your portfolio.
... we have a small favour to ask. Help us bring the power of algorithmic trading strategies to individual investors.
All content in this article was automatically generated by algorithms. This ensures that there are no human biases in the analysis provided. This approach to investing is not new and has been around for more than three decades. Yet, it has been available to only the most affluent or elite investors leaving individual investors to trade on emotions (such as fear and greed), intuition and poor analysis from third-parties. We want to change this.
We want to empower investors with all the tools and analysis required by them to make a rational investment decision.If you found Spotalpha useful, consider making a contribution. For as little as $5 you can support our efforts and it takes less than a minute. Thank you. Contribute