Samco AMC launches TimerSTP to help investors find the “right time” to invest in equity mutual funds
Samco Asset Management Pvt Ltd (Samco AMC) today (26 September) launched TimerSTP with Overnight Fund. In a statement, the AMC said TimerSTP is a tool that determines when to invest more and when to invest less in an equity program. To do this, the tool relies on Samco’s proprietary EMOSI (Equity Margin of Safety Index) indicator, which is based on the principle of safety margin investing.
Samco said that when markets are high, EMOSI signals to invest with caution, and when markets are low, allows for aggressive investing ensuring maximum equity exposure for investors. This allows investing in the markets without any emotional bias and eliminates the stress of constantly monitoring the markets while offering a higher reward/risk ratio.
According to the statement, Samco will disclose EMOSI on a daily basis. He said the premise of TimerSTP lies in two common mistakes made by the average investor:
- First, an average investor inadvertently buys a stock program at the top of the cycle by following the herd mentality or continuing the FOMO rally.
- Second, an average investor who exits after stocks has already fallen significantly due to fear and peer pressure of taking bigger losses.
“But the secret to avoiding such mistakes is to get the timing right in the markets. It is not important to catch the exact high or the exact low, it is more important to avoid entering late when the markets have already gone up and to avoid exiting even later when the markets have already gone up. steep decline from the peak,” the statement read. .
“Managing investment timing is a critical part of generating above-benchmark alpha while effectively managing drawdowns,” he added.
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The AMC said its Overnight Fund was designed to incorporate the added benefits of TimerSTP.
How EMOSI works
EMOSI was designed to act inversely to broad equity indices because whenever markets are attractive, EMOSI rises and when markets are expensive, EMOSI declines. SAMCO said this allows an average investor to invest in stocks to generate potential alpha without making dramatic drawdowns.
Samco AMC said EMOSI is represented by a range of values from 1 to 200, where 1 denotes the lowest safety margin and 200 the highest.
EMOSI allows TimerSTP to transfer variable amounts ranging from 0.01X to 6X of the base installment via the Systematic Transfer Plan (STP) approach from the Source Scheme to the Target Capital Scheme based on market and margin levels of security.
“With TimerSTP, we enable the average investor to avoid entering the markets at the wrong time and navigate market cycles efficiently. We build strategies by incorporating basic investment principles and, when they are integrated with technology, they become a scalable product that will help all investors, big or small, by enabling them to generate higher risk-adjusted returns over the long term,” said Umeshkumar Mehta, CIO of Samco Asset Management Pvt Ltd. .
“Just as in world-class cricket there is a time to hit the ball when it’s safe and miss the ball when it’s risky, similar principles are being introduced for investors by Samco through the launch of TimerSTP. When markets are expensive, TimerSTP, through its in-house smart engine of EMOSI, will allow investors to invest only nominal amounts and when markets are attractive, will allow them to go all out and invest aggressively to generate much higher returns,” added Viraj Gandhi, CEO of Samco Asset Management Pvt Ltd.
(Disclaimer: mutual fund investments are subject to market risk. There is no guarantee or assurance that any investment strategy will help you achieve your desired objectives)