Our Algorithm

The suggestions given by our algorithm are initially time based. Investors investing for a shorter period of time (i.e. less than two years) are given more exposure to Debt Funds as over the short term, returns from Equity Funds are volatile. Those investors looking at a medium term horizon (i.e. between two to five years) are given moderate exposure to Equity, but the portfolio is still slightly biased towards Debt Funds as the returns of these over the given time frame are more predictable and stable. For the long term (i.e. greater than five years) equity funds vastly outperform debt funds and thus the algorithm suggests mainly equity funds for such portfolios.

Once the initial allocation is done between equity and debt, the algorithm then further differentiates the portfolios by giving specific types of mutual funds that should be present in each portfolio as per the risk score obtained from the questionnaire. Now that we have the exact asset allocation for each portfolio, we can then move on to selecting the individual funds.

To do this, our algorithm uses Modern Portfolio Theory, a theory proposed by Harry Markowitz, a Nobel Prize winning economist. Using MPT, our algorithm finds such a combination of funds, within the given asset allocation that provides you with the maximum returns for the risk that you are comfortable with. The funds we select are chosen on the basis of the past 3Y and 5Y returns, and only the best performing funds are selected to be a part of your portfolio.