Last updated 25 February, 2025.
This case study examines the effectiveness of Diversiview’s portfolio optimisation tools in a real-world scenario.
A Diversiview user, Robins Joseph from myguide2wealth analysed and optimised a portfolio consisting of a mixture of small/mid cap funds and large cap funds on December 29, 2023. Using Diversiview’s sophisticated algorithms, Robins was able to calculate the expected performance of his portfolio and optimise its asset allocation for a better expected outcome.
Robins’ Original Portfolio
First, Robins wanted to analyse the current performance of his portfolio, which had the following allocations:
- Nippon India Large Cap – 25%
- Kotak Equity Opportunities – 15%
- Parag Parikh Flexicap – 25%
- Motilal Oswal Midcap Fund – 10%
- Nippon India Small Cap – 10%
- ICICI Prudential Value Discovery Fund – 15%
With Diversiview’s ‘Portfolio Universe™’, Robins was able to easily visualise his portfolio expected risk-return position, and compare it to thousands of other potential positions:
Robins’ Optimal Portfolio
Robins’ ‘Portfolio Universe™’ diagram indicated that there are portfolio positions located on the Efficient Frontier that could offer a better expected return and a lower level of risk. The Efficient Frontier, represented by the yellow, dotted line in the graph above, indicates the maximum expected return for any given level of risk.
His first step was to optimise his portfolio using the ‘Calculate Optimal Portfolio’ feature in Diversiview. This provided an allocation that aimed to maximise his portfolio’s expected return while minimising risk.
Observing the potential improvement in expected return, with a slightly higher volatility, Robins decided to reallocate his portfolio according to the Optimal Asset Allocation calculated by Diversiview:
- Nippon India Large Cap – 11.48%
- Kotak Equity Opportunities – 4.00%
- Parag Parikh Flexicap – 1.00%
- Motilal Oswal Midcap Fund – 27.68%
- Nippon India Small Cap – 24.94%
- ICICI Prudential Value Discovery Fund – 30.90%
With the new allocation, Robins observed a significant shift towards small and mid-cap funds, reflecting the prevailing market conditions in 2023.
Portfolio Performance
On December 30, 2024, Robins reviewed the performance of his portfolio and compared it to his original allocation from 2023. By implementing the changes prescribed by the Optimal Portfolio, Robins achieved improved performance. This strategic reallocation aimed to maximise his expected return while managing risk to a comfortable level.
Note: Diversiview does not provide financial advice or recommendations. Analyses are intended to provide investors with insights and information. The decision to reallocate assets was made solely by Robins.
Diversiview’s Optimal Allocation Calculation significantly boosted Robins’ portfolio performance in 2024. His optimised portfolio reached ₹132,748 by December 30th, a 32.75% increase (₹32,748) from the initial ₹100,000.
In contrast, his original portfolio allocation would have only grown to ₹126,574 (26.57% growth). This resulted in an additional gain of ₹6,174, representing a 6.175% relative outperformance attributable to Diversiview’s optimisation.
Indian Market Shift in 2025
Due to the success of the calculated optimal allocation in 2023, Robins decided to continue with this current allocation into 2025. However, during January, he noticed a change in the market in India, with increasing concerns about small and mid-cap volatility and a renewed focus on the stability of large-cap companies.
To test whether his own observations and financial news were accurate, Robins re-analysed his portfolio on February 3, 2025 with Diversiview, to learn more about its current risk-return position:
Robins observed that his previously optimised portfolio position had shifted significantly from the Efficient Frontier. His asset allocation has also drifted slightly from the original optimisation:
- Nippon India Large Cap – 10.83%
- Kotak Equity Opportunities – 3.82%
- Parag Parikh Flexicap – 1.02%
- Motilal Oswal Midcap Fund – 30.91%
- Nippon India Small Cap – 23.24%
- ICICI Prudential Value Discovery Fund – 30.18%
Re-Optimising to Optimal Portfolio 2025
As the current allocation of his portfolio is far from efficient, Robins’ decided to re-optimise his portfolio and reallocate to account for the Indian market shift:
This also had a significant impact on his asset allocation:
- Nippon India Large Cap – 28.91%
- Kotak Equity Opportunities – 22.94%
- Parag Parikh Flexicap – 10.33%
- Motilal Oswal Midcap Fund – 7.18%
- Nippon India Small Cap – 11.64%
- ICICI Prudential Value Discovery Fund – 19.00%
With the new allocation, Robins noted that there has been a marked shift towards large cap funds.
Conclusion
By leveraging Diversiview’s Optimal Allocation calculation, Robins was able to enhance his portfolio’s performance. Within just over a year, his portfolio value grew from ₹100,000 to ₹132,748, representing a remarkable 32.75% increase, and a 6.175% increase in value compared with a no change scenario (i.e. maintaining the original allocation).
Furthermore, Robins re-optimised his portfolio in February 2025 gaining insights into the market shift in India. He proactively adjusted his portfolio allocation to emphasise large-cap funds and will continue to monitor its performance throughout 2025.
This case study highlights the efficacy of data-driven investment strategies and the value proposition of Diversiview’s portfolio optimisation tools.
Note: This analysis is based on the provided data and does not constitute financial advice. All data accurate as of February 2025. Investors should conduct their own research and consult with a financial advisor before making investment decisions.