Dilzer Consultants - Investments and Financial Planning

An ISO 9001 (2008) Certified Company

   SEBI REGISTERED INVESTMENT ADVISOR

Wealth Creation

Buy Hold and Sell  Our wealth management services provide a comprehensive level of planning and investment management in two phases. The first phase of our wealth management services includes, development of a financial plan and portfolio design. There is a onetime fee charged for the initial plan development. The second phase of this, is, ongoing management and financial planning services, for which fees are charged based on Assets Under Management. Included with this phase are monthly/quarterly reports on the clients investment portfolio, target allocation and related performance. This includes a tracking of portfolio holdings, interest and dividend payments, capital gains, overall portfolio performance, recommendations for profit booking and portfolio re-balancing. Periodic meetings are held with the client to review his/ her current situation and investment portfolio.

Process Objective

The objective of this process would be to optimize the risk – return relationship for a given risk profile by applying scientific and proven methods of portfolio construction and management.

Steps followed in the Portfolio  Construction Process.

1 Asset Allocation

2 Fund Categorization

3 Fund Selection

4 Portfolio Optimization

 

Asset Allocation Methodology

We formulate a forward looking Asset Allocation Strategy, taking cues from Strategic and Tactical models.

The Asset Allocation would be based on 2 broad parameters.

1 Risk Profile of the Client

2 Market Dynamics

The strategic asset allocation would be revolved around the Risk Profile of the client while tactical allocations would be based on the Market Dynamics. To ascertain the allocation towards the tactical side, we will look at the Valuation & Momentum Metrics of the Equity Markets. 

We use the following 5 data points to gauge the tactical modeling.

1 Trailing PE Ratios of Nifty 50.

2 Index values of Nifty 50.

3 Near month futures for Nifty 50.

4 FII Inflows

5 Volatility

All data points are dated back since 2000, except Volatility.

Appropriate statistical functions are used for the model optimization.

Fund Category Breakup

We view it as a subset of Asset Allocation and a precedent to our Fund Selection Process. This will also be based on the client’s Risk Profile and Market Dynamics, although at a subtle level. For Instance, Index and Large Cap funds within the Equity exposure for client’s whose risk tolerance is low. For Debt, it will more likely be accrual category instead of duration strategy. As the risk tolerance level goes up, the categorization will undergo a change.

Fund Selection Process

The table below explains the Research Methodology followed by us in choosing the funds. 

Parameters

Weightage (in %)

Returns

 

1 Year

5

3 Year CAGR

10

5 Year CAGR

 

7 Year CAGR

 
   

Ratios

 

Standard Deviation

10

Sharpe Ratio

7.5

Sortino Ratio

7.5

Treynor Ratio

7.5

Information Ratio

7.5

Jensen’s Alpha

7.5

R-Squared

7.5

Beta

 
   

Negative Attributes

 

Negative Count

10

Mean Return

10

Standard Deviation

10

Leading indicators such as YTM, Duration, Sector Exposure also may be used from time to time for refining the fund selection process.

Portfolio Optimization Process

Having chosen the recommended funds, the next step is to decide what percentage should go into a respective portfolio. There again, we use a scientific model viz Mean Variance Optimization. This model will identify portfolios that falls on the Efficient Frontier optimizing the Risk-Return relationship.

Portfolio Presentation

A portfolio fact sheet with the relevant underlying attributes in terms of Return, Risk and Portfolio will be released at a  regular frequency. The factsheet will also explain the return attribution, that is what percentage of the portfolio returns has come from Asset Allocation, Scheme Selection etc. 

We are confident about the scientific process that we follow and this new methodology will reiterate the extensive research we are anyway doing on specific schemes and portfolios.

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