Glossary and Definitions:
Glossaries and Definitions are integral part of these terms and conditions and hence to be construed as part of this agreement.
- Index Value: Every StockBasket has an index value calculated in real time using live prices/end of day data. Index value for all StockBaskets start from 100 since their inception date and helps investors know the returns generated since launch or between two specific dates. For example, if the current index value of the StockBasket is 130, it means it has generated 30% since its inception. If the index value of a StockBasket was 300 last month and the current index value if 325, it means it has generated (325/300)-1 = 8.33% return in last one month.
- Compounded Annual Growth Rate (CAGR): When investors calculate returns for more than a year it is prudent to use compounded annual growth rate (CAGR). CAGR helps understand the rate at which an investment grew every year over a multiyear time period.
For example, let’s suppose the index value increased from 100 on 1st Jan 2016 to 125 on 1st Jan 2017. And subsequently on 1st Jan 2018 the index value was 175. We can calculate that in the 1st year, the investment earned (125/100)-1 = 25% returns and during the 2nd year the investment earned (175/125)-1 = 40%. We can see that year to year growth rates were different. CAGR allows understanding investment performance after smoothening it over 2 years. ((175/100)^(1/2))-1 = 32.29% is the CAGR during the period. So, the investment earned approximately 32% each year over a 2 year period.
- Target Date: Target date is the date on which the value of a StockBasket is expected to be achieve the Target Value.
- Target Value of the StockBasket: Our research team has analysed each and every stock that forms part of all StockBaskets and have projected growth rates for the target period and estimated the stock price as on Target date. Target values are calculated as estimated prices of the constituent stocks at current weights. These target returns may change in reality and are for illustration purposes only.
- Target Index: Target Index has been calculated using Target Value. Suppose, On the day of buying a StockBasket, the Index is 100 and the value of basket is Rs. 10,000. If the Target value is estimated to be Rs. 19,000, then the Target return will be 90% (19,000/10,000 = 90% Return). Thus, index value will be 190 (100+100*90%).
- StockBaskets Classification-
- Recommended Baskets: The StockBaskets populated in the “Recommended” section of the app / website are the StockBaskets that are more appropriate at that point in time considering the market cycles and fundamentals of the company.
- Featured Baskets: The StockBaskets populated in the “Featured” section of the app / website are the StockBaskets that have features are liked by the Samco research team and provide good value for money.
- Popular Baskets: The StockBasket populated in the “Popular” section of the app / website is the most bought StockBasket by the investors.
- Watchlist: An investor can add StockBaskets to Watchlist and can see all of their “Watchlisted” StockBasket in one place.
- Popularity of StockBasket: Popularity is based on the number of people invested in a StockBasket. In simple words, it indicates how popular a StockBasket is among the investors. Popularity of a StockBasket is classified as follows –
- Least Popular
- Popular
- Most Popular
- Strength of StockBasket: It indicates the strength of the underlying portfolio of a StockBasket. Markets are volatile and carry risk. Investments will fall from time to time based on market conditions. However, what's important is how quickly these investments can bounce back when the markets stabilise and go up again. “Excellent” strength indicates that a StockBasket is expected to bounce back sooner than a StockBasket whose strength is “Low” or “Ultra-Low”. Strength of a StockBasket is classified as follows -
- Value for Money: It indicates the amount of value an investor gets for money invested. According to the Father of Value Investing – Benjamin Graham, “The Three Most Important Words in Investing are Margin of Safety”. “Great” value for money indicates that you are getting to buy a StockBasket at or below the intrinsic value and expected to create greater wealth than a StockBasket with “Poor” value for money. Value for money is classified as follows -
-
Rebalance: Samco Research Team will monitor day to day performance of the constituents (stock composition) of the StockBasket, if there is any change in the fundamental outlook or due to changed business scenario or due to an important update or event, or changes in the weights due to market price fluctuations, the constituents in the StockBasket may be revamped i.e. quantity of a constituent stock reduced or added or altogether removed or addition of a new stock. Rebalance may happen as and when needed depending on the market conditions.
Upon a Rebalance triggered by SAMCO, the Client holding the particular StockBasket may be notified by way of app notifications, mails and SMS and calls. The Client has to approve (transaction of buying or selling the stock constituent(s)) the rebalance to align the proposed changes with the latest version of StockBasket.
- Minimum Investment Amount in StockBasket: It is the minimum amount that needs to be invested for buying a particular StockBasket which comprises of number of suggested stocks at weights that is closest to suggested weight in the StockBasket. Even a single share can be bought, thus, in order to ensure that investor ends up buying at least one share of the highest priced stock, while maintaining prescribed weights, he/she/it needs to invest a minimum amount as on that day’s prevailing real time prices of all the stocks constituents comprised in the particular StockBasket which is the minimum price of the StockBasket.
- Weights and Weighting Methodology: Every Stock has a prescribed weight in the StockBasket, decided by the Research Team. Weightage decides how much of the invested money will be going into every stock of StockBasket. If A stock has 10% weight in the StockBasket and prevailing value of the StockBasket Rs 1000, then Rs 100 will go in stock A, but the actual transaction value may be at a slight variance.
- Returns Calculations:
- Total Return: Total return is calculated as the sum of unrealized returns, dividends and realized returns. This is the total return earned by investing in the StockBasket. Suppose Rs.11,276.25 is the minimum investment amount of StockBasket X and an investor buys it at this amount on day zero. 30 days later one of the stocks in the StockBasket announces dividend of Rs. 20 per share. If 10 shares of the company is held as part of the StockBasket investment, the total dividend amount received by the investor is Rs.200 (20 * 10). And the market value of the StockBasket on this day is Rs.15,000. Hence the total returns on that day the investors would have earned would be Rs.3,923.75 (15,000 – 11,276.25 + 200).
- Unrealized Return: Unrealized return is the difference between the market value of the StockBasket on a specific date and the initial amount invested in the StockBasket. Market value is the sum of current market value of all the shares forming part of the StockBasket. E.g. - The unrealized gain in the following case is Rs. 600 (9800 - 9200).
| Company Name |
Qty |
Cost per share |
Total Cost |
Market Price per share |
Total Market Value |
| HDFC Bank |
3 |
1100 |
3300 |
1200 |
3600 |
| HUL |
1 |
1900 |
1900 |
2000 |
2000 |
| TCS |
1 |
1950 |
1950 |
2100 |
2100 |
| HDFC |
1 |
2050 |
2050 |
2100 |
2100 |
| Total |
9200 |
|
9800 |
*Please note that this StockBasket is for illustration purpose only.
- Realized Return: Realized return is the profit or loss earned by partially or completely exiting the StockBasket. Assume Rs.3,000 was invested in the StockBasket on the first day of the month. Suppose after 3 years, the market value of the StockBasket increased to Rs.5,400. Suppose the investor needs the money and sells the StockBasket for Rs. 5,400, then he / she gets a profit of Rs. 2,400. This amount of Rs. 2,400 is the realized return which is the amount of money that the investor receives in his / her SAMCO Ledger which can then be easily used to trade on StockNote or transfer to his / her bank account. However Samco being an execution platform will charge its execution fees as per its prevailing tariff sheet.
- Returns Calculation Methodology:
StockBasket performance does not include transaction fees, taxes and other related costs. No actual money was invested or trades were executed while calculating StockBasket performances. Returns are based on end of day prices of stocks in a StockBasket, provided by exchange approved third party vendors. All StockBaskets are reviewed and rebalanced as and when needed depending on the market/fundamental conditions. As a result of this review process, some stocks may be added, some may be removed and some may undergo weight changes. Target returns may change due to rebalances if any.
We assign an index value of 100 at the StockBasket creation date. This means that we assume a hypothetical investment of INR 100 in the StockBasket at the creation date. Individual stock investments are calculated as per their weights in the StockBasket. Thus, a stock having a weight of 10% in the StockBasket will receive a hypothetical investment of INR 10 ( 10% * INR 100) on the inception date. After calculating individual stock investments, we calculate the individual number of shares that could be bought using hypothetical investments determined in the last step. If the same stock which received a hypothetical investment of INR 10 has an end of day stock price of INR 2 on the creation date, it will have 5 shares in the StockBasket (INR 10/ INR 2). In this way we determine the individual number of shares of each stock in the StockBasket, on the creation date. Multiplication of individual number of shares of different stocks in the StockBasket with respective end of day share prices on the Creation date, results in a total hypothetical investment of INR 100 (index value at the inception date) Once the individual number of shares are decided for a stock in the StockBasket, it remains constant unless changed in a review/rebalance process. Every day index value is calculated by multiplying no of shares of each stock with respective end of day prices of stocks on that particular day. If the index value of the StockBasket after 30 days is 110, it means that your hypothetical investment of INR 100 is worth INR 110 now. Thus, StockBasket is worth INR 10 more compared to the investment date and has generated a return on 10% (INR 10/ INR 100). StockBasket returns for any time period (week/ quarter/ annual) is determined in the same manner by comparing beginning and end of period index values.
- Historical time periods including pre-creation
Historical / back tested returns are calculated based on the weights of the stocks in a StockBasket as on the date of creation of basket. The returns that are calculated post the date of creation of a StockBasket may include the effects of rebalances if any.
- Fees Refund Guarantee: In a rare case scenario, if after holding a StockBasket for 5 continuous years a client has made negative absolute returns, then SAMCO is obligated to refund that client entire Research Subscription Fees collected from him/her/it over the 5 years of holding period.
Assume, an investor buys a StockBasket named “X” for a minimum investment amount of Rs 100 on 20th September, 2019, and on 21st September, 2024 the total return (Unrealized Return + Realized Return + Dividends) is less than 0, then the investor would get a refund for the Research Subscription Fees.
