Galactic Evergreen

Medium-term Capital Growth through Multi-asset Dynamic-allocation approach using ETFs

Overview

The Evergreen portfolio is exposed to Indian Equities through broad-based indices, and gold in order to grow and accumulate capital with dynamically-allocated and tactically managed assets.

Core Investment Objectives

of the Evergreen Portfolio

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I. Growth

Thriving through exposure to Broad-based Equity with:

  1. the fundamental investment objective of funding, and
  2. the quantitative investment objective of fat-tailed returns.
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II. Accumulation

Ensuring survival through tough times through exposure to Gold with:

  1. the fundamental investment objective of financing, and
  2. the quantitative investment objective of inflation-linked returns.
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III. Preservation

Creating a safety net through exposure to Debt with duration less than 365 days with:

  1. the fundamental investment objective of financing, and
  2. the quantitative investment objective of risk-free.
    3 Configurations

    The Evergreen portfolio comes in 3 configurations - SAVE, GROW & PRIME
    suitable for different Risk Profiles & Purposes

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    Medium-term Capital Growth through Multi-asset LOW-volatility approach using ETFs

    • Suitable for: Low-risk profile
    • Exposed to NIFTY50, Government Overnight Funds, and Gold.
    Invest in the Evergreen SAVE Portfolio through smallcase

    Galactic Evergreen SAVE smallcase by Modulor Capital

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    Medium-term Capital Growth through Multi-asset BALANCED return-volatility approach using ETFs

    • Suitable for: Medium-risk profile
    • Exposed to NIFTY50, NIFTY NEXT50, Government Overnight Funds, and Gold.
    Invest in the Evergreen GROW Portfolio through smallcase

    Galactic Evergreen GROW smallcase by Modulor Capital

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    Medium-term Capital Growth through Multi-asset HIGH-return approach using ETFs

    • Suitable for: High-risk profile
    • Exposed to NIFTY50, NIFTY NEXT50, Government Overnight Funds, and Gold.
    Invest in the Evergreen PRIME Portfolio through smallcase

    Galactic Evergreen PRIME smallcase by Modulor Capital

    Rolling Returns

    The Evergreen Portfolios shows superior 5 Year Rolling Returns in comaprison to the respective benchmarks


    Notes on Inclusions & Exclusion in Performance and Curves


    A note on Rolling Returns in 5 Numbers
    Recent Returns

    1, 3 and 5 Year Performance

    Recent Returns are not an indicator of future performance.

    Portfolio Features

    Solutions, System & Strategy

    Solution

    Investment Objective 

    Core Portfolio
    • Accumulate and Grow wealth with a time horizon of 5 years and beyond
      Gain by investing in Multi-asset & Multi-strategy portfolios.
      Start with a minimum lump sum and add more using SIP or lump sum at any schedule
    System

    Parameters 

    Broad-based Equity | Multi-asset
    • 4 ETFs (NIFTYBEES, JUNIORBEES, GOLDBEES & LIQUIDBEES)
    • Quantitative ✓ | Fundamental ✕ | Technical ✓
    • Monthly Signal Review
    • Low Churn
    • Delivery-based & Long-only
    • Majority of trades fall under LTCG
    Strategy

    Investment Process 

    Multi-Algorithm
    1. Dynamic Asset Allocation
    2. 2-D Diversification for 2 Asset creating 1 Risk Configurations
    3. Strategic & Tactical Barbell Principle
    4. Tactical Management for Growth & Preservation Assets
    Suitability

    Preferences, Capacity & Requirements

    Risk Preferences

    Exposure to Volatility 

    LOW

    Suitable for:
    Low ✓ | Medium ✓ | High ✓

    Risk Preferences Criteria for Satellite Portfolios
    Risk Capacity

    Minimum ticket size of investment 

    LOW
    • Minimum Capital: SAVE 25,000/- | GROW 1,00,000/- | PRIME 2,00,000/-
    • Ticket Size: Low ✓ | Medium ✓ | High ✓
    Risk Capacity Criteria for Core Portfolios
    Risk Requirements

    Minimum Holding Period 

    5 Years+
    • Medium-term (to be realized after 5 years or beyond)
    Applications

    Practical Uses 

    Wealth Waterfall

    Best used to:

    • Create a corpus for beginners
    Asset Allocation

    Meeting the Investment Objectives of the Evergreen Portfolio

    Dynamic Asset Allocation

    Investment Objective

    • Dynamic Asset allocation varies allocation between asset classes basis a formula that is linked to a set of variables such as time, economic measures, ratios, etc.
    • Inter-asset Dynamic Asset Allocation: The portfolio dynamically allocates capital between the Cygnus sub-portfolio, and the Sagittarius sub-portfolio. The change is triggered when the Tactical status of any of the sub-portfolios changes from in-market to out-of-market or vice versa, thereby balancing between the Growth Asset – equity and the Accumulation Asset – Gold. When both the assets are out-of-market and likely to face volatility, the portfolio chooses debt as the preferred option.
    • Intra-asset Dynamic Allocation: Within the Cygnus sub-portfolio capital is allocated to different market caps based on a formula to maximize the output of the Growth asset – equity.
    Rebalancing
    • The Evergreen portfolio is rebalanced every month to meet the target asset allocation between NIFTY50, NIFTY NEXT50 (NIFTY JUNIOR), GOLD, and DEBT.
    • The default variance from the target asset allocation is 1%.
    • When any of the components undergo a change in Tactical Management, i.e. from in-market to out-of-market (or vice versa), the funds are reallocated to the balance asset classes or are moved to preservation assets i.e. DEBT.
    Long Term Performance

    Long Term Equity Curve and Stats


    The Evergreen Portfolios exhibit a Continuous Return Profile.
    A note on Continuous Return Profile


    Invest in the Evergreen SAVE Portfolio

    You can invest through your existing broker integrated with our partner Administration Platforms - Smallcase.
    A smallcase is a basket of stocks that reflects an idea.

    Invest in the Evergreen SAVE Portfolio through smallcase

    Galactic Evergreen SAVE smallcase by Modulor Capital

    Invest in the Evergreen GROW Portfolio through smallcase

    Galactic Evergreen GROW smallcase by Modulor Capital

    Invest in the Evergreen PRIME Portfolio through smallcase

    Galactic Evergreen PRIME smallcase by Modulor Capital

    Galactic Suite

    Multi-Asset Broad-Market Portfolios for Preservation, Accumulation & Growth
    using Exchange Traded Funds

    The Galactic Family of Portfolios

    When you decide to invest for your future self, be it 10, 20, 30, or 50 years from today, we respect your choice that requires a long-term commitment. During this time you may encounter:

    • Turbulence in the markets
    • Personal challenges

    Investment portfolios suffer the greatest damage when these events coincide (need for money and drop in portfolio value). The Galactic Suite provides a comfortable and doable investment journey while avoiding unsavory outcomes using 5 strategies combined to make 5 portfolios for the long to medium term.

    Inspiration Behind The Galactic Suite

    The Galactic Suite is inspired by The Milky Way galaxy, which has 5 arms in the shape of Golden Spirals. 5 itself is a Fibonacci number.

    Correspondingly, the Galactic Suite’s portfolios, are themselves a portfolio of 5 strategies representing the 5 arms of the Milky Way.

    Each of these strategies gives exposure to a separate asset class and is named after the arms of the Milky Way galaxy:

    1. Cygnus
    2. Perseus
    3. Sagittarius
    4. Scutum-Crux
    5. Norma
    Cygnus Algorithm
    Construction, Rolling Returns & Equity Curves
    • The Cygnus algorithm enters and exits India Equity using Tactical Management algorithms run on the flagship index the Nifty 50.
    • Consequently, the algorithm leads to 100% exposure to equity during In-market periods [N% of the time] and 100% exposure to the alternate-asset (Arbitrage) during Out-of-market periods [(1-N)% of the time] i.e. Tactical Barbell.
    • Over a period of time, this exposure is akin to holding [N% of equity] and [(1-N)% of alternate-asset] 100% of the time i.e. a Strategic Barbell.
    • The Alternate Asset used is Equity Arbitrage (Volatility-linked asset).
    • The Tactical Barbell yields not only better returns, but also lower volatility (and drawdowns) in comparison to a simple Strategic Barbell.
    Exposure

    The Tactical Barbell created using the Cygnus algorithm gives better results than a Buy and Hold Strategy as seen from the Rolling Returns and Equity Curves below.

    Cygnus Algorithm on various Component Indices
    Nifty 50

    Nifty 100

    Nifty Next 50

    Nifty Midcap 150

    Sagittarius Algorithm
    Equity Curves & Rolling Returns on Gold
    • The Sagittarius A and Sagittarius B algorithms enter and exit Gold using Tactical Management algorithms run on Gold-INR.
    • Consequently, the algorithms lead to 100% exposure to gold during In-market periods [N% of the time] and 100% exposure to the alternate-asset (low-durartion bonds) during Out-of-market periods [(1-N)% of the time] i.e. Tactical Barbell.
    • Over a period of time, this exposure is akin to holding [N% of gold] and [(1-N)% of alternate-asset] 100% of the time i.e. a Strategic Barbell.
    • The Sagittarius A is a low-touch algorithm and is more tax-efficient than its counterpart Sagittarius B. On the other hand, Sagittarius B gives better returns and is a high-touch algorithm.
    • The Alternate Asset used is Low-duration Bonds (Inflation-linked assets).
    • The Tactical Barbell yields not only better returns, but also lower volatility (and drawdowns) in comparison to a simple Strategic Barbell.
    Exposure

    The Tactical Barbell created using the Cygnus algorithm gives better results than a Buy and Hold Strategy as seen from the Rolling Returns and Equity Curves below.

    Cygnus Algorithm on various Component Indices
    Sagittarius A (Low Touch)

    Sagittarius B (High Touch)

    Notes on the Performance Curves
    • 1: Integrated Actual and Backtest Curves – The Equity Curve and the Monthly/ Weekly returns plots represent the integrated picture of backtesting as well as the live performance of the strategy.
    • 2: Inclusions & Exclusions in Curve – The curve and figure do not include any trading costs, taxes, or advisory fees charged. Actual returns to the investor will be net of such costs and may also vary as per the execution prices achieved by the investor when placing and executing orders.
    5 Numbers Framework
    Rolling Returns

    Five Numbers compare the Rolling Returns offset by 1 review period (1 month or 1 week) for the specified timeframe.

    • The Expected Return is the median of all the periods.
    • The Best Case Scenario and Worst Case Scenario Returns are the extremes outcomes. They represent the role of luck in investing/ trading.
    • The Expected Upside and Expected Downside Returns are the averages between the median and the extremes respectively. These are the realistic bounds between which an investor can expect outcomes with high probability.
    Asset Allocation
    for Core Portfolios

    Asset allocation involves dividing your investments among different assets, such as stocks, bonds, gold, cash, etc.

    External View: Different assets have different characteristics and increase or decrease in value at different points of time (market cycles) owing to various conditions affecting an economy or the world at a point in time. Since these conditions are very hard to predict diversifying into various assets becomes essential for an investor.

    Internal View: Asset allocation is also relevant to the investment objectives of the investor. For an individual or a family, the asset allocation will be guided by the life-stage and wealth levels. Since wealth levels are relative (at a given point of time) and life stages are predictable (for a few generations), asset allocations can be reasonably determined. For a non-individual, the allocation will be guided by more-clear cut objectives defined by its investment policy or charter.

    Asset allocation can be done in 2 ways:

    I. Dynamic

    Dynamic asset allocation requires frequent adjustment of the mix of asset classes to suit market conditions basis an underlying formula.

    • For medium-term portfolios 5 to 10 years.
    • Rebalance according to a schedule.
    • Efficient for portfolio characteristics like lowering volatility or enhancing returns.
    II. Strategic

    Strategic asset allocation requires investors to set target allocations for various asset classes and only rebalance the portfolio at certain triggers.

    • For long-term portfolios beyond 10 years.
    • Rebalance according to an event occurrence.
    • Efficient for lower tax and better returns.
    2-D Diversification
    Inter-Asset and Intra-Asset Diversification

    Diversification means investing in multiple assets and their variants. This is akin to owning multiple businesses which are independent of each other. The intention is to bank on the fact that not all businesses will perform badly or fail at the same time. This means some growth and safety will be provided by each asset class at different times for the invested corpus.

    Diversification can not only be done in between asset classes (inter-asset diversification) but also within an asset class (intra-asset diversification). These are the 2 dimensions of 2-D Diversification.

    I. Inter-Asset Diversification

    The first dimension or the inter-asset diversification is determined by the Asset Allocation strategy. It involves splitting up capital between different asset classes. The trade-off here is between preservation and growth. Asset classes in order of lower safety to higher safety are as follows:

    Preservation Assets (Government Bonds > Corporate Bonds) >> Accumulation Assets (Gold) >> Growth Assets (U.S. Equity > India Equity)

    Typically, for the individual, a higher percentage of Growth assets are preferred in youth, and more Preservation assets are taken up as the individual matures. This allocation can be fixed (static/ strategic) or variable (dynamic/ tactical).

    II. Intra-asset Diversification

    Diversification can also be done within an asset class by taking exposure to different components of the asset class. This exposure is highly linked to the volatility of the different components of the asset class. Volatility can be easily liked to a single major parameter of the asset class. The various parameters for different asset classes are as follows:

    Variability of Duration (Government Bonds) – This means that funds exposed to constant maturity bonds are less risky than those which are exposed to variable maturity bonds i.e. actively managed.

    Quality (Corporate Bonds) – Quality of debt i.e. AAA, AA, A, BBB, BB, B, etc, ratings are directly linked to the volatility and returns of the bonds. Lower-quality debt carries a higher risk of default but also can give more returns. Lower-quality debt is also more volatile.

    Touch-frequency (Gold) – Strategies which hold gold for longer are less risky than once which tactically manage (move in and out of the asset) the market cycles of gold at a higher frequency.

    Specialization (U.S. Equity) – In a developed economy like the U.S. specialized companies (such as technology) carry more risk than the general economy, but also carry the potential of growing faster than the general economy.

    Market-cap (India Equity) – In a developing but large market like India, the size (or market capitalization) of the companies is a good indicator of risk involved with them and hence the volatility. larger size carries less risk, smaller size more risk as well as returns.

    The 2-Dimension of Risk can be crossed over to meet various investment objectives for various risk profiles as follows.

    Asset Class
    Asset Parameter
    Variation
    		 
    From less risky
 to more risky assets
    		 
    Variation within
an asset class

    Categories within
the asset class.
    Government Bonds (India) Variability of Duration Fixed Duration | Variable Duration
    Corporate Bonds (India) Quality 100% AAA | 90% AAA | 80% AAA
    Gold Touch frequency High-touch | Low-touch
    U.S. Equity Specialization S&P500 | NASDAQ100
    India Equity Market-cap (Size) NIFTY50 | NIFTY100 | NIFTY NEXT50 | NIFTY MIDCAP150
    3 Point Risk Criteria
    for Satellite Portfolios

    Criteria 3 Point Scale:

    • Low (limited to Large-cap stocks only – Top 100)
    • Medium (limited to Large, Mid & Small-cap stocks only – Top 500)
    • High (All cap stocks)
      3 Point Risk Capacity Criteria
      for Core Portfolios

      Criteria 3 Point Scale:
      Minimum ticket size invested one-time or cumulatively per annum.

      • Low (Up to 1 lac)
      • Medium (1 to 5 lac)
      • High (5 lac and above)

       

        Continuous Return Profile

        A strategy with a Continuous Return Profile generates growth uniformly over a period of time. This means it may suffer mild drawdowns from time to time in order to get the benefits of long-term holding taxation as well as fining cheap valuations in falling markets. Periods of growth or cheap valuation cannot be predicted and require the investor to stay invested in the strategy for at least the minimum recommended period in order to realize its characteristics and generate the desired returns.

        SEBI Registration Certificate
        License granted on 11 September, 2020

        Investment advisory – Number of complaints
        Data and Trends

        Data for the month ending April 2022

        Sr. No. Received From Pending at the end of last month Received Resolved Total Pending# Pending Complaints > 3 months Average Resolution time^ (in days)
        1 Directly from Investors 0 0 0 0 0 0
        2 SEBI (SCORES) 0 0 0 0 0 0
        3 Other Sources (if any) 0 0 0 0 0 0
        Grand Total 0 0 0 0 0 0

        ^ Average Resolution time is the sum total of time taken to resolve each complaint in days, in the current month divided by total number of complaints resolved in the current month.

        The trend of monthly disposal of complaints

        Sr. No. Month Carried forward from the previous month Received Resolved* Pending#
        1 April 2021 0 0 0 0
        2 May 2021 0 0 0 0
        3 June 2021 0 0 0 0
        4 July 2021 0 0 0 0
        5 August 2021 0 0 0 0
        6 September 2021 0 0 0 0
        7 October 2021 0 0 0 0
        8 November 2021 0 0 0 0
        9 December 2021 0 0 0 0
        10 January 2022 0 0 0 0
        11 February 2022 0 0 0 0
        12 March 2022 0 0 0 0
        13 April 2022 0 0 0 0
        Grand Total 0 0 0 0

        *Inclusive of complaints of previous months resolved in the current month.
        #Inclusive of complaints pending as on the last day of the month.

        The trend of annual disposal of complaints

        Sr. No. Year Carried forward from the previous year Received Resolved* Pending#
        1 2020-21 0 0 0 0
        2 2021-22 0 0 0 0
        3 2022-23 0 0 0 0
        Grand Total 0 0 0 0

        *Inclusive of complaints of previous years resolved in the current year.
        #Inclusive of complaints pending as on the last day of the year.

        Investor Charter
        Investor Charter in respect of Investment Adviser (IA)

        A. Vision and Mission Statements for investors

        • Vision

        Invest with knowledge & safety.

        • Mission

        Every investor should be able to invest in the right investment products based on their needs, manage and monitor them to meet their goals, access reports, and enjoy financial wellness.

        B. Details of business transacted by the Investment Adviser with respect to the investors

        • To enter into an agreement with the client providing all details including fee details, aspect of Conflict of interest disclosure, and maintaining the confidentiality of information.
        •  To do a proper and unbiased risk – profiling and suitability assessment of the client.
          • To obtain registration with Know Your Client Registration Agency (KRA) and Central Know Your Customer Registry (CKYC).
          • To conduct an audit annually.
          • To disclose the status of complaints on its website.
          • To disclose the name, proprietor name, type of registration, registration number, validity, complete address with telephone numbers, and associated SEBI regional/local Office details on its website.
          • To employ only qualified and certified employees.
          • To deal with clients only from official numbers.
          • To maintain records of interactions, with all clients including prospective clients (prior to onboarding), where any conversation related to advice has taken place.

        C. Details of services provided to investors (No Indicative Timelines)

        • Onboarding of Clients
          • Sharing of agreement copy
          • Completing KYC of clients
        • Disclosure to Clients
          • To provide full disclosure about its business, affiliations, compensation in the agreement.
          • To not access client’s accounts or holdings for offering advice.
          • To disclose the risk profile to the client.
        • To provide investment advice to the client based on the risk-profiling of the clients and suitability of the client.

        D. Details of grievance redressal mechanism and how to access it

        • In case of any grievance/complaint, an investor should approach the concerned Investment Adviser and shall ensure that the grievance is resolved within 30 days.
        • If the investor’s complaint is not redressed satisfactorily, one may lodge a complaint with SEBI on SEBI’s ‘SCORES’ portal which is a centralized web-based complaint redressal system. SEBI takes up the complaints registered via SCORES with the concerned intermediary for timely redressal. SCORES facilitates tracking the status of the complaint.
        • With regard to physical complaints, investors may send their complaints to:- Office of Investor Assistance and Education, Securities, and Exchange Board of India, SEBI Bhavan, Plot No. C4-A, ‘G’ Block, Bandra-Kurla Complex, Bandra (E), Mumbai – 400 051.

        E. Expectations from the investors (Responsibilities of investors)

        • Do’s
          i. Always deal with SEBI registered Investment Advisers.
          ii. Ensure that the Investment Adviser has a valid registration certificate.
          iii. Check for the SEBI registration number.

        Please refer to the list of all SEBI registered Investment Advisers which is available on the SEBI website at the following link: https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intm Id=13

        iv. Pay only advisory fees to your Investment Adviser. Make payments of advisory fees through banking channels only and maintain duly signed receipts mentioning the details of your payments.

        v. Always ask for your risk profiling before accepting investment advice. Insist that Investment Adviser provides advisory strictly on the basis of your risk profiling and take into account available investment alternatives.

        vi. Ask all relevant questions and clear your doubts with your Investment Adviser before acting on the advice.

        vii. Assess the risk-return profile of the investment as well as the liquidity and safety aspects before making investments

        viii. Insist on getting the terms and conditions in writing duly signed and stamped. Read these terms and conditions carefully particularly regarding advisory fees, advisory plans, category of recommendations, etc. before dealing with an Investment Adviser.

        ix. Be vigilant in your transactions.

        x. Approach the appropriate authorities for redressal of your doubts/grievances.

        xi. Inform SEBI about Investment Advisers offering assured or guaranteed returns.

        • Don’ts

        xii. Don’t fall for stock tips offered under the pretext of investment advice.

        xiii. Do not provide funds for investment to the Investment Adviser.

        xiv. Don’t fall for the promise of indicative or exorbitant or assured returns by the Investment Advisers. Don’t let greed overcome rational investment decisions.

        xv. Don’t fall prey to luring advertisements or market rumors.

        xvi. Avoid doing transactions only on the basis of phone calls or messages from any Investment adviser or its representatives.

        xvii. Don’t take decisions just because of repeated messages and calls by Investment Advisers.

        xviii. Do not fall prey to limited period discounts or other incentives, gifts, etc. offered by Investment advisers.

        xix. Don’t rush into making investments that do not match your risk-taking appetite and investment goals.

        xx. Do not share the login credentials and passwords of your trading and Demat accounts with the Investment Adviser.