Earnstock Momentum Portfolio

What is Momentum?(In a Nutshell)

Momentum Strategy invests in a stock that is moving upwards and gets out of stocks that are moving downwards. It is as simple as that. The Earnstock Momentum Portfolio holds up to 15-20 stocks selected on the basis of proprietary criteria, primarily price momentum, and reviews them weekly.

Richard Driehaus is sometimes considered the father of momentum investing but the strategy can be traced back before Donchian. The strategy takes exception with the old stock market adage of buying low and selling high. According to Driehaus, “far more money is made buying high and selling at even higher prices”.

momentum portfolio

Why Earnstock strategy why not someone elses ?

The Earnstock Momentum Portfolio is one of the longest-running and most successful momentum portfolios. It recently completed three years of being active and continues to be one of the most popular strategies among our investors. This page answers the most frequently asked questions about the Earnstock Momentum portfolio, available as part of the Earnstock Premium subscriptions or as standalone access.

Our past track record speaks all about it.

Our Porprietory Valuation and Risk Management Models

How To Know Whether This Strategy Is Ideal For Me Or Not?

I am new to investing and looking for good performance without putting in time for research. Where do I invest?
You’ve reached the right place. We do the hard work of research so that you don’t have to. Based on your risk profile I would recommend you to start with Momentum Portfolio for a risk-managed stable performance.

I am looking for an investment option for my mother who’s retired. What do you recommend?
If she is a low-risk taker then she should invest in LT Wealth Compounder for long-term and stable portfolio returns over and above debt funds. If she is willing to take some risks for consistently monthly returns then she should opt for Alpha Asset.

I am a high-risk taker and am looking for high returns. What do you recommend for me?

For higher returns, we recommend the momentum portfolio that has been doing quite well recently. You can also look at our derivative strategy Alpha Asset for generating consistent monthly returns.

My horizon is 5 years and I want a steady return with low drawdowns. What portfolios would you recommend?
For a steady return with low drawdowns, we’d recommend you to divide your investment in Momentum and LT Wealth Compounder portfolios. It gives you balanced exposure to multiple factors & asset classes to give you a better return than the benchmark at low drawdowns.

I am an existing DIY investor. Why should I take your portfolio services?
Firstly you should check whether you are able to generate consistent returns and beat the benchmark. If you fails in any of the criteria you should opt for our services and by joining us you get much more than the portfolio advice.

What is the Fees?

Zero fees, yes you heard it right we are charging zero from our clients.

What is the universe of stocks considered?

All NSE-500 stocks, meeting minimum criteria in daily traded volume and company market capitalization. This translates to nearly 90% of the total market cap trading in India.

How are stocks screened?

Our proprietary model scores stocks based on a set of price and volume parameters. Stocks in the 90th percentile and above are candidates for inclusion in the portfolio. Stocks exit the portfolio in three scenarios, other stronger stocks emerge, or if existing stocks fail one or more criteria for retention in the portfolio and due to weight balancing of stocks.

What is the likely tax impact on returns?

Momentum typically holds stocks for two to three months. Hence, most gains qualify as STCG (Short Term Capital Gains). Based on current taxation rules, assume 15% of portfolio gains will be paid as tax.

Hypothetical Taxation illustration: If the portfolio returns 25% in a financial year, the tax impact = 15% X 25% = 3.75% i.e. your after-tax return comes to 25% – 3.75% = 21.25%

Other costs to consider: Brokerage costs*, STT (Securities Transaction Tax) levied on every buy and sell, and DP charges. Assume another 1% of gains to be applicable for these costs.

  • We strongly disagree to use discount brokers if you are not so tech savy, in that case prefer to go for full service brokers, since saving a small brokerage can also cost you if you are not so tech savy.

Should I invest lumpsum or SIP into the portfolio?

Since Momentum as a strategy reviews and rebalances frequently, a SIP versus a lumpsum approach does not make a difference. However, if you are new to the concept of momentum investing, you should start small and scale up over time as you get more comfortable with the strategy.

Let’s say you plan to invest ₹ 5L into the strategy but are unsure about investing all of it at once. You can start with ₹1L and add the remaining in similar increments over the next four months.

What returns can I expect from investing in Earnstock Momentum Strategy?

This is impossible to predict. Our Momentum strategy does well in general market up-trends or when some components of the market show strong positive movement. However, it also underperforms at times with respect to the NIFTY. This underperformance at times can last for 3 to 6 months. Over longer holding periods, we do believe it beats the market.

The performance of the Momentum Portfolio as of June 2021.

If your expectations are to see 30%+ annual returns irrespective of broad market conditions, you will be disappointed.

We publish monthly fact-sheets of Momentum portfolio performance. Here are notes from the last 3 months:

Sep 2021: E-Mail ( Not published on the blog)
July 2021: E-Mail ( Not published on the blog)
June 2021: https://earnstock.in/momentum-portfolio-june-2021/

How can I invest in the Earnstock Momentum Portfolio?

As per SEBI mandate, to receive our portfolio recommendation, you need to open a Demat account with our partner (i.e. Motilal Oswal Financial Services Ltd). So we can recommend you our portfolio without any charges.
We are adding our certification with the respective exchanges so that you can ensure our authenticity.
NSE Certification: http://earnstock.in/wp-content/uploads/2021/10/earnstock_certificate.pdf
BSE Certification: http://earnstock.in/wp-content/uploads/2021/10/earnstock_certificate.pdf

Once you open your demat account with our partner via us and fund your account, our team will call you and assist you in building the recommended portfolio. And every Saturday you will be receiving a mail regarding portfolio updates and any urgent changes required, so you can reshuffle the portfolio on Monday morning (if in case it is required).

What if I don’t want to open a new demat account with Motilal Oswal?

In that case, contact our team they will help you in finding the best possible solution.

If you are still having any doubts, reach out to us on Whatsapp: +91-9651733221. Else reach out to us on email connect@earnstock.in.