Capitalmind Passive is a portfolio investing in India’s top 250 companies across Nifty 50, Next 50, and Midcap 150 indices. It offers broad market exposure without fund manager bias, making it ideal for disciplined SIP investing.
Strategy Overview
Portfolio Rationale
Capitalmind Passive is a portfolio aimed at 3 major indices-Nifty 50, Nifty Next 50 & Mid cap 150. The strategy is to buy the top 250 Indian companies.
With a simple combination of India’s top 250, the returns seem good; and think about it: There’s no analyzing stocks, and there’s no need to “change” the portfolio because oh banks are going to fall or oh, maybe that stock is better and so on. Whatever gets out of the top 250 is out, automatically, and the new entrants are in. Automatically. And our portfolio will have the Indian biggies and the new emerging mid-caps.
What’s interesting:
- It is a low-cost, low-churn portfolio.
- No Fund manager risk
- Suitable for SIPing.
Portfolio Methodology
Defining the Universe
The portfolio captures India’s top 250 listed companies by combining Nifty 50, Nifty Next 50, and Nifty Midcap 150. It covers the breadth of large and mid-cap stocks, representing the most significant businesses in the Indian economy.
Constituent Screening
The portfolio invests in index ETFs that track Nifty 50, Nifty Next 50, and Nifty Midcap 150. This ensures exposure to India’s top 250 companies without any active stock selection. Changes in the indices are automatically reflected in the portfolio through the ETF composition, offering passive and efficient participation in market movements.
Weighting
Weights are aligned with index methodologies, ensuring passive and proportionate exposure to the top 250 companies in India. This keeps the allocation systematic and eliminates fund manager discretion.
Rebalance
This portfolio follows a passive investment approach and does not adhere to a fixed rebalance schedule. Rebalancing is done on an ad-hoc basis, typically reviewed annually, to ensure alignment with index changes or structural shifts in underlying ETFs.
Research
This passive portfolio minimizes research overhead and fund manager risk. The strategy is simple, rules-based, and suitable for long-term SIPs, delivering broad-based equity exposure without the complexity of active management.
Definitions and Disclosures
CAGR
CAGR (compounded annual growth rate) is a useful measure of the growth or performance of a portfolio. Every year, returns generated by a portfolio are different. Let’s say if a portfolio is live for 3 years and returns generated by the portfolio are 5%, 15% & -7%, respectively, in the first, second and third year. Then we calculate CAGR as a return number that would give the same terminal investment value at the end of three years, as we get when the portfolio gains by 5% & 15% in the first two years and drops by 7% in the third year. The CAGR in this case would be 3.94%. This means that you will always end up with the same investment value at the end of the third year, if your portfolio gains by 3.94% every year or 5%, 15% and -7%, respectively in the first, second and third year.
For portfolios live for less than 1 year, absolute returns in the applicable time period are shown. Only live data is considered for all calculations. Returns and CAGR numbers don’t include backtested data.
Volatility Label
Changes in stock/ETF prices on a daily basis result in fluctuations in the investment value of your portfolio. In order to help investors understand the extent of fluctuation they might observe with their portfolio investment, every portfolio is categorised into one of the three volatility buckets – High, Medium and Low Volatility. This is done by comparing the portfolio’s volatility against that of the Nifty 100 Index.
If the daily change in the investment value of a portfolio is too drastic, it means the prices of stocks/ETFs in the portfolio are changing very rapidly. Such portfolios have High Volatility. Investing in High Volatility portfolios means that changes in your investment values can be very sudden and drastic, whereas fluctuations in the investment value of Low Volatility portfolios are expected to be lower in comparison.
Investment Horizon
For each portfolio, we provide a recommended investment time duration to realise the best returns for the portfolio. Each portfolio has one of the following recommended investment horizons:
- Short Term: For portfolios with a recommended investment duration of <1 year
- Medium Term: For portfolios with a recommended investment duration of 1-3 years
- Long Term: For portfolios with a recommended investment duration of >3 years
Rebalance
Rebalancing is the process of periodically reviewing and updating the constituents of a portfolio. This is done to ensure that constituents in the portfolio continue to reflect the underlying theme or strategy.
Categorisation of Portfolio constituents
All portfolio constituents fall in one of the below categories:
- Large Cap
- Mid Cap
- Small Cap
- Multicap ETFs
- Debt
- Gold
- Silver
- Commodity
- REITs/InvITs
All the stocks listed on NSE(National Stock Exchange) are arranged in decreasing order of Market Cap, so that the stock with the largest market cap gets 1st Rank. Stocks ranked equal to or below 100 are categorised as Large Cap. Stocks ranked below or equal to 250, but ranked above 100, are categorised as Mid Cap stocks. Stocks ranked higher than 250 are categorised as small-cap.
Holdings Distribution
All constituents belonging to a portfolio are categorised under different segments. The weightage of a segment is calculated as the sum of the weights of all constituents belonging to that segment. Suppose 4 constituents, with each having a weight of 10%, belong to the Large Cap segment. Then the weight of the Large Cap segment in the portfolio will be 40% (4*10%).
Determination of comparable index
Each of our portfolios is benchmarked against a market index that best reflects its investable universe.
- Momentum, Focused, and Low Volatility Portfolios
These portfolios select stocks from the Nifty 500 universe. As a result, the Nifty 500 Index has been chosen as the benchmark, providing a broad and appropriate reference point that aligns with the selection base. - Equity Mutual Fund Portfolio
This portfolio invests in active equity mutual funds, many of which derive their exposure across large, mid, and small caps. To ensure consistency and comparability, the Nifty 500 Index is used as the benchmark. - Passive Portfolio
This portfolio primarily consists of ETFs and index funds that track largecap and midcap indices. Accordingly, the Nifty LargeMidcap Index serves as the benchmark, representing a blended exposure to both segments.
- Fixed Income Portfolio
The CRISIL Long Duration Debt A-III Index serves as a benchmark for fixed income funds as it reflects the performance of high-quality, long-duration debt instruments. It helps measure how effectively a fund navigates interest rate cycles while managing duration and credit risk in a stable, low-risk manner.
General Investment Disclosure
Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. Investors should consider consulting their financial advisor while considering any investment decisions.
Risk Disclosure
Please note that investing in securities involves various types of risks that may impact investments. Key risks that can affect all asset classes inter alia include changes in:
- Market volatility
- General market conditions
- Trading volumes/liquidity and settlement periods
- Interest rates
- Rate of inflation
- Domestic and/or global political, economic and financial developments
- Policies and/or legal and regulatory frameworks by the government and other appropriate authorities
Asset class-specific risks inter alia include:
a. Risks related to Equity and Equity Linked Investments (ELIs) include:
Equity shares and equity-related instruments are volatile and prone to price fluctuations on a daily basis. The price of securities may be affected by factors such as price and trading volume volatility, currency exchange rates, company-specific news and rumours, etc. Midcap and smallcap stocks generally exhibit higher volatility compared to largecap stocks.
b. Risk related to investment in Debts, Bonds and Money Market Instruments
- Interest Rate Risk: Changes in interest rates may affect the valuation of securities, as the prices of securities generally increase as interest rates decline and generally decrease as interest rates rise. Prices of long-term securities generally fluctuate more in response to interest rate changes than prices of short-term securities.
- Credit Risk: Credit risk refers to the risk that an issuer of a fixed income security may default or be unable to make timely principal and interest payments on the security. Normally, the value of a fixed income security will fluctuate depending upon the changes in the perceived level of credit risk as well as any actual event of default.
- Liquidity Risk: The liquidity of a bond may change, depending on market conditions, leading to changes in the liquidity premium attached to the price of the bond. At the time of selling the security, the security can become illiquid.
c. Risk related to exposure to Equities, Debt and Commodity through Exchange Traded Funds (ETFs)
- Sector/Index Risk: ETFs that track specific sectors or indices are exposed to concentration risks. Adverse performance in those sectors or indexes can significantly impact returns.
- Tracking Errors: While ETFs aim to mirror their benchmark, they may not perfectly track the concerned benchmark, leading to performance deviations due to factors like expenses or liquidity constraints of the underlying constituents of the ETF.
- Liquidity Risk: In volatile markets, liquidity for certain ETFs may be low, making it harder to buy or sell units without affecting the price significantly.
d. Risk related to Commodity related Instruments
Risk related to commodity (including gold and silver) related instruments are affected by several factors. The price of a commodity may be affected by factors including its demand-supply dynamics in domestic and global markets, restrictions on the movement/trade of the commodity in domestic and global markets, Indian and foreign exchange rates, large scale transactions in the commodity by governments, central banks and other major institutions, etc.
e. Risk related to investments in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)
- Sector Risk: Changes in the real estate and infrastructure sector, including changes in applicable laws and regulations, can affect the price and volatility of securities/instruments of REITs and InvITs.
- Interest Rate Risk: REITs/InvITs usually secure loans at the trust level and subsequently distribute the amount among the underlying special purpose vehicles (SPVs). In case of a rising interest rate environment, debt payment increases for the trust and adversely impacts the cash flow for unitholders. This inturn reduces cash flow-based valuations of REITs/InvITs.
- Credit Risk: Credit risk refers to the risk that an issuer of a REIT/InvIT security/instrument may default on interest payment or even on paying back the principal amount on maturity. Further, valuations may be affected by a change in the credit rating assigned to the REIT/InvIT and their SPVs by credit rating agencies.
- Asset Transfer/Acquisition Risk: The valuation of REITs/InvITs heavily depend on the underlying assets held by the trust. There is a risk that the transfer or acquisition of these assets, which often relies on sponsors/management commitments, may not materialise as planned. If the assets are not transferred or acquired, the valuation of the trust and future cash flows may be significantly impacted.
- Risk of lower than expected Distributions: The distribution by a REIT/InvIT will be based on the net cash flows available for distribution. The amount of cash available for distribution principally depends upon the amount of cash that the REIT/InvIT receives as dividends or the interest and principal payments from portfolio assets.
In light of the risks involved, you should transact in securities only after understanding the associated risks. Please consider and assess all risk factors and your risk tolerance before making investment decisions.
Disclosure
The content and data available in the material prepared by the company and on the website of the company, including but not limited to index value, return numbers and rationale, are for information and illustration purposes only. Charts and performance numbers do not include the impact of transaction fee and other related costs. Past performance does not guarantee future returns, and the performance of the portfolios is subject to market risk. Data used for the calculation of historical returns and other information is provided by exchange approved third party vendors and has neither been audited nor validated by the Company.
Information present in the material prepared by the company and on the website of the company shall not be considered as a recommendation or solicitation of an investment. Investors are responsible for their investment decisions and are responsible to validate all the information used to make the investment decision. Investor should understand that his/her investment decision is based on personal investment needs and risk tolerance, and information present in the material prepared by the company and on the website of the company is one among many other things that should be considered while making an investment decision.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
Capitalmind Research LLP (hereafter referred to as “Capitalmind”) is a SEBI registered Research Analyst (INH000014003). Please carefully note that by using this Website, you are agreeing to be bound by all of the terms and conditions and privacy policy of this Website (Disclosures| Privacy). Users are advised to read all investment related documents carefully before investing.
Capitalmind reserves the right to select the users of the Website and may take decisions as to whether a person is permitted or not to use the services provided on this Website. Capitalmind offers different services, including Premium and portfolios on Smallcase that are described below.
- Capitalmind offers Research and Model Portfolios through Capitalmind Premium (premium.capitalmind.in) – our subscription product, which is a different offering from Capitalmind Smallcase, and is hosted on our own website (premium.capitalmind.in)
- Capitalmind offers Model portfolios on https://www.smallcase.com/ that may be variants of similar portfolios we offer in other Subscription services (Premium).
Variations between similar portfolios across these services are often due to liquidity of the stock or limitations of the service (Premium vs Smallcase etc). Each of our services follows its own cadence and frequency of updates – portfolio changes, exits, additions etc. that are determined by the Capitalmind team as per its own judgement.
Customers of any Capitalmind service should take note that the various services (Premium vs Smallcase etc.) may not be aligned when it comes to portfolio and investment recommendations. For example, a recommendation made in one service may have already been made or may be made later in the other services. Further, portfolio changes in one service may run counter to positions in a different service offered by Capitalmind, and any such conflict is incidental and not by design.
No content on this Website should be construed to be investment advice. Information on this Website including data, reports, [index value, return numbers or rationale] are for information purposes only. Users should use their own judgment or consult a qualified financial advisor prior to making any actual investment or trading decisions.
While the Website may state strategies or positions in the market, the intent is solely to showcase effective risk-management in dealing with financial instruments. Any trading done on the basis of this information is at your own, sole risk. Equity investments, stocks and ETFs are subject to market and investment risk. Users may experience significant loss of capital and please note that past returns do not guarantee future returns. [Charts and performance numbers are backtested / simulated results calculated via a standard methodology and may not include the impact of transaction fee and other related costs. Data used for calculation of historical returns and other information is provided by exchange approved third party data vendors and has neither been audited nor validated by Capitalmind.]
The information, material and services provided on this Website is on an “as is” basis. While Capitalmind takes all due measures to ensure that the information on this Website is reliable, the information may not be accurate. Some of the information provided herein may be dated and may not reflect the most current positions taken by Capitalmind in each of its strategies.
Information on this Website may not be suitable for all investors and investments shall be made in view of the risk appetite and investment objective by each User. Capitalmind does not offer any product/service with assured/guaranteed returns.
Capitalmind, its directors, subsidiaries, affiliates, employees, agents or representatives shall not be responsible for any losses, damages or any expenses of whatsoever nature arising out of the investment decision taken by any person by use of or relying on the information provided on this Website.
The payment you make for Capitalmind Premium is the fee to access our model portfolio, research article and Slack community. It is not the funds you will invest in the Portfolios.
If you do not agree with any of the terms and provisions mentioned herein, you are requested to please refrain from usage of this Website. Capitalmind does not offer refunds for the Capitalmind Premium service.
Contact Details:
Support Telephone: 9638387890
Support Email: contact@premium.capitalmind.in
Compliance Office Details:
Name: Sidhanth Paul
Email: racompliance@capitalmind.in
Contact: 9638387890
Grievance Office Details:
Name: Jay Dhruv
Email: contact@premium.capitalmind.in
Contact: 9638387890