ORMI India Worst 20 ©

Mukul Pal · March 12, 2013

We are pleased to introduce our third ORMI India Index. We call it ‘The Worst 20’.
Why is it called ‘Worst’? The Index selects the worst performers among a group of assets or the worst performers among a broad index e.g. India Nifty. Why is it 20? The index selects the bottom 20 percentile of the performers among the respective group.
Why do we think Worst 20 selection is worth a portfolio? Because markets are prone to reversion and in the long run worst performers become top outperformers. Moreover unlike the best, the worst are at a discount, which makes them inexpensive and hence more likely to add value to a portfolio. Please refer to our blogs and SSRN page for related material.
What are the features of ‘Worst 20’? Unlike our other ORMI products, the ‘Worst 20’ product line is designed for longer holding periods 12 month and more. They are designed to outperform the underlying universe i.e. India Worst 20 should outperform the Nifty performance.
Is the worst designed as a relative return fund? Most of ORMI indices are designed to conserve cash and give absolute positive returns annually. However absolute return does not say much on its own, one need to compare relative returns vs. the underlying universe. Owing to its long holding period i.e. 12 months and more ‘The Worst 20’ is completely passive and is designed to outperform the underlying universe. But worst 20% allocations reduce drawdowns and volatility dramatically compared to the universe.
How should ‘Worst 20’ be used for investment? The ORMI Worst 20 is a running portfolio that is rebalanced every quarter. An investor can enter at any time of the year. How did ‘ORMI India Worst 20’ perform? On an annualized basis (From September 2005), ORMI India Worst 20 delivered 21.6% compared to 14% by the Nifty.
Which are the top three performing components of ORMI India Worst 20? United Spirits, Union Bank and DLF are the top performing components with returns at 156%, 35% and 31% respectively.
Why should you invest in ORMI India Worst 20, if you already have CNX 100 and Nifty 50? First; ORMI India Worst 20 delivers more performance on a historical basis compared to peer benchmarks. Second; ORMI India Worst 20 is easier to simulate compared to NIFTY 50 or CNX 100. One can allocate INR 10 lakhs (USD 20000, 100 units for each component). Third; the rebalancing makes the ORMI Index dynamic and allows for convenient investing. Enjoy the latest ORMI India Worst 20.
Enjoy the latest ORMI India Worst 20.
The latest ORMI India worst 20 © Index update carries the equity curve from September, 2005 till date. The Orpheus Risk Managemen Index (ORMI) is up 441.18 % since 2005.