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First Global - Human plus Machine model [FG-HUM]:

The FG-HUM is a game-changing offering for small and mid-size investors. It is a curated list of 25-30 stocks from India that simplifies your equity investing completely.

This portfolio is usually rebalanced every 3 months, although there would be occasional mid-quarter changes.

On rebalancing date, based on an in-depth analysis of micro and macro data, some stocks leave the basket and other stocks enter.

The engine that drives the portfolio is the FG ExoTech, that is First Global’s proprietary tech stack, which relies on a number of cutting-edge Machine Learning models, with an overlay of decades of human intelligence.

It is this model that has provided First Global with the very best performance in the Multi-cap Portfolio Management space since inception on both pure returns as well as risk-adjusted returns. The same model is now available to smaller investors

This combinatorial approach of Human + Machine helps identify stocks that are best positioned to capture nearly every single alpha-generating move in the markets.

The portfolio is not skewed towards any particular sector or market cap range. In fact, that is the beauty of the approach, that the portfolio is not restricted to any particular set of factors, stocks or sectors. The strategy is to remain flexible and open to portfolio changes without getting attached to the past.

First Global’s investment strategy is data and situation-based. They rely on the fact that flexibility is key to managing portfolios well, as no strategy works forever.

They adapt and marry these with zero-emotion risk management.

Risk Management and protecting investors' money is absolutely the cornerstone of their philosophy.

First Global's portfolio selection is based on their proprietary Human + Machine Model, the ExoTech.

They have a blended investment strategy which is designed taking into consideration multiple factors like Value, Growth, Price Movement, Valuation, Quality of Stock, Overall Market Dynamics, etc. Essentially, they have a bias-free approach to investing. Their Human + Machine Model is purely clinical. It doesn't storify investing.

Also, their strategy is one of taking a large number of small bets as opposed to the conventional strategy of taking a small number of large bets. As a result of this diversification, they have found that one can generate tons of alpha without adding proportionately to risk.

Avoidance of big losses is absolutely central to their investment process and philosophy, and Risk Management is the God they worship.

The First Global Investment Team, under the guidance of Ms. Devina Mehra, one of the most credible Investing Minds in India, with more than 30 years of experience in the world of Investing and Research.

For further details, please visit: https://www.firstglobalsec.com/about-us

First Global is a multinational asset management firm, with a pedigree of 30+ years, with operations spread all over India and in major global financial centers, serving clients from across the world. 

Regulated across the world by the likes of SEC in the US, FCA in the UK, CIMA in the Cayman Islands, and SEBI in India, First Global Group is also a composite member of Bombay Stock Exchange Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). First Global is a Category 1 Merchant Banker, a licensed Portfolio Manager and a licensed Research Entity. 

First Global's Research has been covered widely not just across the Indian media, both print & television, but also in global publications like The Wall Street Journal, Business Week, CBS, Financial Times, Forbes, Fortune, Barron's, CNBC, etc., and rated very high in Institutional Surveys.

First Global is known for its long track record in correctly predicting markets across decades and cycles.

As a subscriber to First Global, you profit from their experience and tech edge.

• First Global is India's most innovative, forward-thinking, tech-driven Securities Firm. And has been for 30 years. 
• Blazing a trail of creative thinking, seeing trends ahead of the crowd, identifying major inflection points in companies, sectors, countries, regions and asset classes - First Global stands apart from the rest.

First Global always stays data-driven and objective, not believing in story-based investing or falling in love with stocks. They eliminate biases - the enemy of wealth-creation.

At First Global, risk management is one of the most important pillars of the investment process.

First Global’s risk management framework is built on the concept of Investing being a Loser's game. That means the key to winning is to avoid the big mistakes. If one can side-step the big losses, one is already way ahead of everyone else.

Risk management practices are embedded within every step of the investment process.

Diversification: Recommended portfolios are highly diversified, considering not just the number of holdings, but also the sectors & correlation across the different holdings.

Liquidity: All holdings are in highly liquid instruments. Each security must pass extremely rigorous liquidity criteria before being eligible for inclusion in the portfolio.

Dynamic Asset Clustering: First Global does not rely on the traditional method of measuring sectoral risk where each stock is exclusively categorized into one sector or industry. Stocks can have sensitivities to multiple sectors. First Global’s AI based clustering algorithms give a truer picture of actual sectoral allocation.

Position Sizing: Positions are sized based on multiple factors like the return expectations from the security, perceived risks, and the volatility profile of the security. The volatility adjustment on position size ensures that certain securities do not end up dominating the performance of the overall portfolio.

Protective Stops: All positions have very well-defined stop loss levels, that trail with favorable price moves. If a position goes below its stop level, the position is flagged for exit without any room for a discretionary widening of the stop.

All the risk management measures, acting in concert, ensure that the investor does not lose big money. First Global protects the downside. That is itself is a source of significant alpha over the long run. 

First Global is extremely disciplined when it comes to risk management. Risk management rules cannot be overridden by human managers.

Investment horizon depends on personal preferences, but First Global recommends a horizon of at least 2-3 years.

The portfolio is under continuous supervision and since money doesn’t sleep, the team at First Global doesn’t sleep either. Typically, portfolios are rebalanced every 3 months, unless market conditions warrant otherwise.

There are several reasons why First Global’s approach is superior to the rest of the industry:

(a) At First Global, decision making is based on a combination of Human + Machine, rather than Human-only.

Humans are unable to process the vast deluge of data that a machine can. A machine can evaluate thousands of companies, on hundreds of different factors, which is impossible for humans.

Human beings are driven intrinsically by emotions, and not facts or data. Which means that their decisions suffer from several classic, well-documented biases and are inconsistent.

Also, humans understandably decline with age, whereas a machine gets better with time, as it gets more and more feedback, both positive and negative, and keeps learning from it.

(b) The fund management team at First Global has decades of experience in navigating all kinds of market situations across the world and in India.

When this team sits and builds a machine learning model, on an ongoing basis, the quality of inputs, analysis and factors that go into building a quantitative Machine Learning model are of a completely different level, as compared to merely "quants" building these. 

The systems also codify human expertise and use it consistently across a wide basket of securities.

(c) The risk management systems are extremely advanced and focus on First Global’s number one mantra of investment management, i.e., do not lose big money.

First Global has an obsessive focus on risk management and risk controls are embedded within every single step of the entire investing cycle.

This combination of Human Intelligence with the most advanced Artificial Intelligence and Data Science known to man, along with extremely tight risk management, means that First Global’s offering is absolutely incomparable to anything else in the entire industry.

Return is important, but what is more important is Risk-adjusted Return. First Global recommends that investors look at Risk-adjusted Return (Return/Volatility) and Gain to Pain Ratio when analyzing performance. 

Risk-adjusted Return is simply the ratio of annualized return (CAGR) to annualized volatility. It represents the net return delivered for every unit of risk taken.

Gain to Pain is easy to compute. It is calculated by dividing the sum of monthly portfolio returns by the absolute value of monthly portfolio losses. High Gain to Pain ratio suggests that the manager has delivered the performance with minimal risk and pain.

One should also evaluate whether the returns have come from a few concentrated bets or a diversified portfolio of stocks. 

Over the period Jun-2005 to Sep-2021, as per backtested data, FG-HUM has returned 31.00% per annum, compared to Nifty 500’s 15.18% per annum and Nifty 50’s 15.40% per annum. An amount of Rs. 1 lac invested in FG-HUM at the beginning of the period would have become Rs. 82.28 lac at the end of the period as against Rs. 10.05 lac for Nifty 500 and Rs. 10.37 lac for Nifty 50.

What is even better is that the Risk-adjusted return (CAGR/Volatility) for FG-HUM over this period is 1.40, compared to 0.64 for Nifty 500 and 0.69 for Nifty 50.

The Gain to Pain ratio for FG-HUM is 1.72 compared to 0.79 for Nifty 500 and 0.83 for Nifty 50.

To add to that, these returns have been achieved on a diversified portfolio of securities, not large, concentrated bets on a few market winners over a certain period.

First Global's research has been covered widely in Wall Street Journal, Business Week, Forbes, Fortune, CBS, Financial Times, CNBC, etc., and rated very high in Institutional Surveys. 

Besides, First Global’s research and views are often published in market related Journals in India and UAE, coupled with routine interactions on CNBC TV 18, ET Now and other respected media houses in India and globally.

Please find attached a few interesting articles and videos:

• Outlook Business long Devina Mehra interview 'we do not storify investments'
• Khaleej times article on Crypto
• Hockey article
• Human + machine video

Some of First Global’s global calls over the years are:

• Predicted the 2000 tech crash
• Anticipated the 2004-07 Emerging Markets bull run
• Predicted the 2008 crash
• Foretold the Oil crash to $30, from $150, in 2008
• Predicted US equities bull market from 2010
• Early identification of Amazon, Apple, Netflix, Dominos
• Saw the Global Market meltdown coming, in March 2020, and hence avoided major losses
• Caught the Global Market revival from March end, and hence, delivered substantial returns from April 2020 onwards

Some of the India specific calls are:

• Predicted Indian small cap bull run from 2015
• Predicted the Indian bull run from 2004
• Identified major stocks and sectors like HDFC Bank, Bajaj Auto, Maruti, Indian Chemical sector, at the beginning of their moves, in the past decades.

A smallcase is a curated basket of stocks/ETFs* that reflects a certain objective (ideas, themes, strategies), backed by the research of the smallcase manager. You can invest in a smallcase in 2 clicks.

*ETFs (Exchange Traded Funds) are baskets of securities that track an underlying index (Nifty, Gold, etc) and can be bought and sold on the exchange.

The smallcase manager decides who can invest in the smallcases created by them and can create two types of smallcases :

• Exclusive smallcases : smallcases which require a subscription to the smallcase manager's Advisory in order to invest in the smallcase. You can subscribe to a smallcase directly from the smallcase profile through the subscription form.
• Public smallcases : smallcases in which anyone who has an account with our partner brokers can invest. You can invest in this smallcase by clicking on “Buy smallcase” in the smallcase profile and logging with your broker credentials.

You can buy smallcases on any of the partner brokers. Select a smallcase, select your broker and invest in less than 2 clicks.

Our partner brokers are:

Zerodha, AxisDirect, Edelweiss, HDFC Securities, Kotak Securities, IIFL Securities, 5 Paisa, Aliceblue, Angel Broking, Trustline, Upstox, Motilal Oswal, Groww, ICICI Direct, Fundzbazar and Dhan

If you have a trading & demat account with one of the supported brokers, you can start investing in smallcases. By clicking on ‘Buy smallcase’ or ‘Login’, you can view the supported brokers and login with the respective credentials. The funds from your broker account would be used for investing in smallcases.

Once you login with your broker credentials, you can use your trading account to buy and sell smallcases. The stocks would be credited to your broker linked demat account.

Further, once you’re logged in, you can securely use the funds available in your broker account to invest in smallcases.

The funds from your broker account are utilised to invest in smallcases and the respective stocks are credited to your broker linked demat account.

Once you have invested, the index value of the smallcase is set to 100 on the buy day for easy tracking. You can monitor the performance of the smallcase from the Investments page on the broker’s smallcase platform.

Also, each smallcase is reviewed periodically and rebalanced to ensure your objective is on track.

The index value of a smallcase indicates the absolute price returns of that particular smallcase from the date of its inception. The index value is set to 100 on the inception date of the smallcase. The current index value shows by how much it has gone up since then.

When buying a smallcase, an index value of 100 is assigned to it. Overtime, if the index value is 108.54, you can easily deduce that your smallcase has generated a total return of 8.54%.

The Details view shows you a more detailed investment overview and P&L breakdown. You can also track individual stock details from the Investments page.

There are no lock-in periods, so you may sell your smallcases anytime. As a concept however, smallcases work best when used for long-term investing.

Exclusive smallcases can be subscribed directly from the smallcase profile by following the steps below : 

• Fill the subscription form with your name, email and phone number
• Choose your broker amongst the list of our partner brokers and login with your broker credentials
• Select the subscription plan and make the payment
• After successful payment, invest in the subscribed smallcase inside your broker platform by clicking on “Invest Now” 

Rebalancing is the process of ensuring the weights of the stocks in the smallcase continue to be true to the underlying smallcase strategy. The rebalance frequency is decided by the creator of the smallcase. You can update your smallcase in 2 clicks to ensure your smallcase is on track with the strategy.

You can request access for an exclusive smallcase by filling up the request invite form on the smallcase profile.

When we invite you to invest in a smallcase, you can buy the smallcase in 2clicks. Invite for multiple smallcases can also be requested.

When we invite you to invest in a smallcase, you can buy the smallcase in 2 clicks. Invite for multiple smallcases can also be requested.

You can also set up an SIP (Systematic Investment Plan) for your smallcases on a weekly, monthly, quarterly and annual basis. The SIP orders will not be placed automatically and will require you to place orders each time an instalment is due. We are working on making this automated soon.

To invest more in a smallcase from your Investments page, click on the smallcase you want to invest more in and click the Invest More button on the right.

No, with smallcases - you are essentially buying exchange listed securities which are exposed to market risks. Investing in market instruments involves risks and investments may lose value.

Also, the returns shown for smallcases are the historical returns. smallcases do not have any projected returns shown. Past performance does not guarantee future returns.

From the individual smallcase page, you can find the Exit option at the right under More Actions. You can then choose a whole exit (sell all the constituents of a smallcase and exit completely) or a partial exit (book some profits while maintaining the minimum amount).

Note: Partial Exit can only be done if you’ve invested more than the minimum amount into the smallcase.

Orders are unfilled under the following circumstances:

• No demat account linked with your trading account (A demat account is required to buy smallcases)
• Insufficient funds while placing the orders (even though a funds check is conducted when you place any order - prices might have changed resulting in a/some order/s not getting filled)
• If a stock is already sold on the broker platform, orders might be unfilled (If you have sold an stock directly via the broker platform, this does not get updated in your smallcases and hence results in unfilled orders)

Note: Partial Exit can only be done if you’ve invested more than the minimum amount into the smallcase.

Repairing the batch helps you place fresh orders for those constituents that were not filled so your smallcase can be complete. For stocks that are already sold on the broker platform, contact the support team to reconcile your holdings.

Archiving a batch excludes those stocks that you have unfilled orders for and completes your smallcase without placing fresh orders.

In this case, the smallcase will not be the same as the original version you meant to buy/invest more/rebalance/exit & will differ in composition & returns.

One of the payment method available to subscribe to a fee based smallcase is eNACH where an e-Mandate is created.

If you want to cancel your e-Mandate(s) linked with any of your fee based smallcase subscription, please drop an email to publisher.help@smallcase.com with the following details:

• Email used for subscription
• Subscribed smallcase Name

We will share the mandate(s) details in response to your request including the below:

• Mandate maximum limit
• Mandate Validity
• UMRN no. (Unique Mandate Registration Number)

To proceed with the cancellation of the mandate, we would require your confirmation by email after verifying the mandate and payment details. 

After receiving your confirmation, we will process the mandate cancellation and update you with the status within 72 hours.