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Quant Long Term Equity
at 2Cents Capital
Utilizing mathematical models, statistical techniques, and automated algorithms to make investment decisions and execute trades, without relying on human judgment
The Evolution of Quant Equity Investing:
A Smart Investment Solution
Long-term equity investment began in 1930s with the introduction of fundamental investing, pioneered by Benjamin Graham, emphasizing the intrinsic value and detailed financial analysis. By the 2000s, advancements in computing and data ushered in quantitative investing, utilizing algorithms, statistical models, and machine learning for precise, data-driven investment decision-making
Our Funds
Investment Objective:
To provide long-term growth of capital, predominantly by investing in equity
Fund Characteristics:
- Utilizes 2Cents Proprietary Quant Model with Machine Learning Algorithm for Stock Selection
- Multi Factor Approach (70% Quantitative Factors, like: Value, Growth, Momentum, Technical etc.; 20% Macro-economic factors; 10% Alternative Factors)
- Fully Hedged Portfolio
- Option-based protection strategies
- No Sectoral Bias
Investment Objective:
To provide long-term growth of capital, predominantly by taking both long and short position
Fund Characteristics:
- Dual Strategy: Employ both long positions (buying undervalued stocks for potential price appreciation) and short positions (selling overvalued stocks or those expected to decline)
- Market Neutrality: Aim to reduce market risk by balancing long and short positions, striving for returns independent of market direction
- Hedging: Short positions act as a hedge, potentially reducing portfolio volatility and offering downside protection in declining markets.
- Risk Management: Incorporate specific sophisticated risk management techniques to monitor and control exposure to factors
What We Do?
Transforming Long-term Equity Investment Landscape through Quant
Our data-driven research methods, inspired by a diverse set of fields including finance, mathematics, statistical analysis, computational techniques, machine learning are constantly advancing the bounds of our industry
Our Quant Investment Framework (QIF)
How We Do?
Research
Our process blends deep research with rigorous data analysis to understand and model market dynamics
We begin by generating ideas grounded in sound economic, financial, and research-driven principles, ensuring they are both practical and aligned with long-term investment goals.
Portfolio Stock Selection
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Continuous Improvement Processes
We use our unique proprietary quantitative stock selection approach for each fund which follows as a systematic process translating into an “optimal” portfolio in a consistent, repeatable and scalable way
Portfolio Monitoring
Combination of automated tools and experience
Our automated portfolio monitoring system monitor all the live portfolios in two ways, i.e., event-based monitoring and stock and business specific monitoring. We identify various macro-economic events affecting different industries, sectors as well as various stocks and business specific events, analyze their impact and forecast those events using predictive analytics
Portfolio Risk Management
A smart combination of Hedging and Dynamic Rebalancing
Considering the volatility in the financial market our portfolios are always hedged against both the systematic (market risk) and no -systematic (stock specific risk) with our specific risk management strategies to hedge each of the funds. We also do regular rebalancing as well as trigger-based rebalancing to maintain the alignment with the strategy
Hedging using Collar Strategy
Combination of buying stock, buying an Out-of-the-money (OTM) put option with a certain strike price, and selling an Out-of-the-money (OTM) call option with a higher strike price. Expectation is stock price to rise (moderately bullish outlook), but not beyond call option’s strike price. The put option provides downside protection, while call option reduces or fully offsets the premium cost of the put. This low-cost approach to risk management ensures a balanced trade-off between protection and returns
Tail Risk Hedging
Hedging tail risk using index put options exerts a drag on portfolio return, exemplified by the widegap between the unhedged portfolio (dotted line) and the hedged portfolio using index options (dashed line). On the other hand, our price-based heuristic that selects cheap equity options (solid line) successfully exploit the asymmetry in market level correlation under different market conditions to hedge tail risk
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Capital Preservation
Protecting your investment against significant downside risk, especially in the event of a Barrier Event, is paramount. Our strategies ensure that your capital remains safeguarded even in turbulent market conditions
Why Invest with US?
QUANT INVESTING
Using rule-based approach relying on mathematical models, statistical analysis and computational techniques to make data-driven investment decisions
FACTOR INVESTING
Analyzing more than 150 factors to identify the best investments for you
MACHINE LEANRING
We use machine learning models for stock selection, portfolio monitoring, forecast risk and reward in the market
Pioneering the future of long-term investments through Data and Innovation
Priyesh Ranjan, CEO, 2Cents Capital
Investment Checklist: Key Questions to Consider Before Investing in Long-Term Equity
Before committing to investing in equity instruments, it’s crucial to evaluate whether the investment aligns with your financial goals, risk tolerance, and market understanding. Answer the following questions to ensure you’re making an informed decision:
1. What are your market expectations?
- Do you anticipate growth, stability, or volatility in the markets?
- How do you expect individual stocks to perform?
2. How well do you know the equity investments?
- Have you ever investment in equity and equity related instruments?
- Are you aware of different factors influencing market behavior and stocks price movements?
3. Are you clear on the equity's payoff structure?
- Do you understand how stock price movements, dividends, or other returns contribute to overall gains?
- Are you aware of economic or company-specific risks that could negatively impact your investment?
4. Do you understand the market scenarios leading to partial or complete capital loss?
- Have you considered the possibility of price declines or total loss of your investment?
- Are you aware of economic or company-specific risks that could negatively impact your investment?
5. Have you assessed the investment's downside risk?
- Have you analyzed the worst-case scenarios and determined your risk tolerance?
6.Does the product match your risk profile?
- Does the level of risk align with your financial goals and investment strategy?
- Have you considered how this product fits within your broader portfolio?
7. Have you reviewed all available information?
- Have you studied the product documentation, including terms, conditions, and potential scenarios?
- Have you consulted independent research or sought professional advice if needed?
8. What is your investment horizon?
- Are you comfortable holding the product until maturity?
- Do you understand the implications of early redemption or liquidity constraints?
By carefully addressing these questions, you’ll be better equipped to determine whether equity investment is the right fit for your investment strategy. At 2Cents Capital, we prioritize transparency and investor education, ensuring you have all the tools and insights needed to make confident decisions.
Why Choose 2Cents Quant Long-Term Equity Fund?
At 2Cents Capital, our proprietary quant stock selection model, expertise in hedging and risk management for long-term equity investment is unparalleled. By utilizing cutting-edge in-house methodologies, we deliver robust, tailored solutions that safeguard investments and maximize returns.
Key Benefits:
- Quant-based Investment Techniques: Customized strategies, adaptable to market dynamics
- Innovative Hedging Techniques: Futures and Options based hedging strategies for portfolio risk management
- Minimize Path Dependencies: Minimize exposure to the path dependency in a rolling put option strategy
- 24 x 7 Monitoring: Automated portfolio monitoring system
- Cost Efficiency: Minimizing transaction costs to protect profitability
- Expert Insights: Leveraging deep market knowledge for informed decision-making.
Meet the team behind
Long Term Equity
Frequently Asked Questions
A long-term investment is typically held for at least 3 years, though some investors aim for even longer horizons, sometimes decades, to take advantage of compounding returns.
Short-term volatility is a natural part of the stock market and shouldn’t deter long-term investors. A well-diversified portfolio and a focus on the company’s long-term growth prospects help investors ride out the temporary fluctuations in stock prices; although the short-term fluctuations need to be monitored.
Quantitative models can help long-term investors by identifying trends, undervalued stocks, optimal portfolio allocation based on a wealth of data, and reducing risk through advanced statistical analysis. Quant investing can also assist in monitoring risk levels and optimizing the portfolio in response to changing market conditions, enhancing long-term returns.
Quants effectively integrate factors such as economic cycles, inflation, and interest rates into their long-term investment models by employing a combination of historical analysis, predictive modeling, and advanced algorithms. This multifaceted approach enhances their ability to anticipate market movements and make informed investment decisions that align with broader economic conditions.
Technological advancements in machine learning, bigdata and cloud computing are fundamentally transforming long-term quantitative strategies by enhancing data accessibility, improving analytical capabilities, refining risk management processes, and increasing strategy complexity. While these advancements present significant opportunities for enhanced performance, they also introduce challenges such as overfitting risks and increased competition among market participants.
