The past year has been nothing short of transformative for Wright Research. When we set out to launch our PMS, we knew we were taking a bold step into a competitive and challenging landscape. Yet, we were driven by our conviction in the power of quantitative investing and our deep-rooted belief that we could make a real difference in the lives of our clients. Today, as we reflect on our journey, it’s incredible to see how far we’ve come.

Starting with just a vision and a dedicated team, we launched Wright PMS into a market that was brimming with opportunity but also fraught with volatility. We didn’t have the visibility we have now—initially, managing even ₹100 crores seemed like a significant milestone, but we ended up closing the year with ₹250 crores in AUM. As the months rolled on, we were met with an overwhelmingly positive reception from investors who recognized the strength of our data-driven approach. The market, with its own set of challenges and fluctuations, became the testing ground for our strategies. And through it all, we not only survived but thrived.

Our growth over the past year has been both exhilarating and humbling. We’ve built a robust community of investors, each one trusting us to manage their hard-earned money with diligence and expertise. The trust they place in us is something we don’t take lightly. It has driven us to push the boundaries of what we can achieve, to continually refine our strategies, and to stay ahead of market trends.

What’s been particularly rewarding is the deep connections we’ve forged with our investors. In the world of PMS, where larger sums are at stake, the relationship between the investor and the portfolio manager is paramount. Over this year, we’ve not only provided our clients with superior returns but also reassured them during volatile times, proving that their trust in us was well-placed.

Looking back, it’s clear that this year was about more than just financial performance—it was about building a brand that stands for trust, reliability, and innovation in the financial services space. As we celebrate this milestone, we are filled with a renewed sense of purpose and excitement for what lies ahead.

Performance Highlights

As we reflect on the past year, our performance metrics stand as a testament to the efficacy of our quantitative strategies and the robustness of our approach. Wright PMS has not only met but significantly exceeded our initial expectations. Our Factor Fund, the flagship strategy, has delivered an impressive 80% return since its inception. This performance is particularly noteworthy given the market’s volatility, with our fund consistently outperforming the BSE 500 by a significant margin.

The journey began with a cautious yet confident step into the market. We knew that our data-driven strategies, honed through years of rigorous research and real-world application, had the potential to deliver strong returns. Yet, even we were pleasantly surprised by the reception and the pace of growth. Over the course of the year, our assets under management (AUM) swelled to over ₹250 crores, a clear indicator of the trust and confidence our investors have placed in us.

What makes our performance even more remarkable is our ability to manage risk effectively while still capturing substantial upside. In times of market turbulence, like the sharp correction following the election results, our fund only saw a 3.7% dip compared to the 6.5% fall in the broader market. This highlights our commitment to protecting our investors’ capital while still seeking out opportunities for growth.

Our strategy is not just about chasing high returns; it’s about delivering consistent performance across different market cycles. We’ve done this by employing a disciplined approach to factor investing, dynamic asset allocation, and rigorous risk management practices. The result has been a fund that not only outperforms in bull markets but also holds its ground during downturns, providing our investors with the stability they seek.

Navigating Volatility

The past year has been a rollercoaster ride in the financial markets, marked by unexpected shifts and heightened volatility. As a quant-driven PMS, our approach has been to embrace this volatility rather than shy away from it. We leveraged our data-driven strategies to anticipate market moves and adjust our portfolios dynamically, ensuring that we not only protected our downside but also captured the upside when the opportunity arose.

Our strategy’s resilience was tested early on during the market correction following the election results. As the broader market experienced a steep 6.5% drop, our portfolio, backed by robust risk management techniques, only saw a 3.7% decline. This performance highlighted the effectiveness of our multi-factor investment approach and the importance of dynamic hedging in volatile times.

Throughout the year, we maintained a vigilant eye on market indicators, adjusting our asset allocations and factor exposures as needed. This flexibility allowed us to navigate the choppy waters of market uncertainty while staying true to our core investment philosophy. Whether it was shifting out of overvalued sectors or rotating into more defensive positions, our strategic maneuvers ensured that our investors were always positioned for both protection and growth.

Our experience over the past year has reinforced the importance of adaptability in a rapidly changing market environment. By leveraging quantitative models that continuously analyze and respond to market data, we were able to stay ahead of the curve and deliver consistent returns despite the market’s unpredictability.

Strategic Portfolio Management

Over the past year, our strategic portfolio management approach has been pivotal in delivering outperformance. We began with a strong focus on sectors such as PSUs and small caps, which initially drove significant growth in our portfolios. However, as the market evolved, we recognized the need to pivot. The interim budget, with its focus on infrastructure and defense, led to a surge in these sectors. We capitalized on this momentum, riding the wave of growth while continuously reassessing our positions to manage risk effectively.

As the year progressed, we observed a shift in market dynamics. Small caps began transitioning into larger, more established players, prompting us to recalibrate our exposure. We strategically reduced our positions in overextended sectors and increased our focus on multinational companies in the infrastructure space, green energy, and other emerging themes like data centers and electronic manufacturing. This proactive approach allowed us to capture new opportunities while maintaining a balanced risk profile.

Key Changes:

1. Finance (including NBFCs): Power finance saw a major allocation in the beginning which was reduced around February and March’24 suggesting a strategic reduction in exposure to financials, due to emerging risks or valuations.

2. PSU Banks: Started with a steady allocation around 7% but dropped to 0% post-April 2024, indicating a complete exit from this sector

3. Pharmaceuticals: After a consistent presence until January 2024, there was a temporary exit from this defensive sector, followed by re-entry in June 2024.

4. Cyclicals (Construction & Engineering, Shipping, Auto-related sectors): Initially, cyclicals like construction and engineering were favored, but their allocations were reduced or exited entirely by February 2024. Conversely, sectors like 2/3 Wheelers and Consumer Electronics saw an increase in allocation in the latter half of the period, reflecting a positive outlook on consumption and industrial recovery.

5. Defensives (Personal Products, Pharmaceuticals): After fluctuations, defensives saw renewed interest by mid-2024, possibly due to heightened market volatility or anticipation of economic slowdowns.

6. New Entrants and Emerging Sectors: Specialty Chemicals, Fertilizers, and Electric Utilities saw a rise in allocations toward mid-2024, suggesting a strategic pivot towards sectors expected to benefit from global trends like sustainability and green energy.

Our portfolio adjustments were not solely sector-driven; they were also informed by factor-based analysis. We employed a multi-factor approach, considering variables such as momentum, value, and quality, to optimize our allocations. This allowed us to navigate sector rotations and macroeconomic shifts with agility, ensuring that our portfolios remained well-positioned for both current market conditions and future trends.

As we look ahead, our strategic portfolio management will continue to evolve. We will remain vigilant, ready to pivot as new opportunities arise, and committed to delivering superior risk-adjusted returns for our investors.

Operational Excellence and Growth

Operational efficiency and strategic expansion have been crucial to Wright Research’s success in its first year of PMS. Transitioning from a digital advisory to a full-fledged Portfolio Management Service required us to establish a robust operational backbone. Initially, we faced challenges related to paperwork and compliance, but these hurdles were quickly overcome by investing in digital infrastructure and streamlining our processes.

Our decision to strengthen the team was instrumental in driving growth. We brought on board dedicated professionals across sales, operations, and technology, which significantly boosted our capabilities. This expansion enabled us to handle the increasing volume of clients and assets more efficiently, ensuring that our operational processes kept pace with our growing scale.

Moreover, our focus on building strong relationships with custodians, brokers, and other stakeholders in the financial ecosystem has paid dividends. These partnerships have not only enhanced our operational efficiency but also reinforced the trust and confidence our clients have in us. As a result, we’ve seen substantial growth in our AUM, surpassing ₹250 crores in just one year, a testament to our operational excellence and strategic vision.

In the coming months, we plan to continue optimizing our operations, with a particular focus on enhancing client onboarding, reporting, and communication processes. We will also explore new technologies to further automate and streamline our workflows, ensuring that we can scale even more rapidly while maintaining the high level of service our clients expect.

Market Evolution and Future Outlook

As we look ahead, the Indian financial market is poised to navigate a period of significant transformation. One of the most anticipated developments is the potential rate cuts by the Reserve Bank of India (RBI), which could inject liquidity into the market, lower borrowing costs, and stimulate investment. This macroeconomic shift could provide a strong tailwind for equities, particularly in interest-rate-sensitive sectors such as banking, real estate, and consumer goods.

At Wright Research, we’ve strategically positioned our portfolios to capitalize on these evolving dynamics. Our investment approach remains agile, with a keen focus on sectors that stand to benefit from the anticipated economic stimuli. For instance, we have increased our exposure to the infrastructure sector, which is expected to gain momentum from increased government spending on capital projects. Similarly, our portfolios are overweight in green energy, technology, and healthcare—sectors that are not only aligned with long-term growth trends but also resilient to economic fluctuations.

Furthermore, as the market broadens and new opportunities emerge, we are constantly refining our quantitative models to adapt to changing conditions. Our data-driven strategies have proven their efficacy over the past year, and we are confident that our disciplined approach will continue to deliver superior risk-adjusted returns. The expansion of our AUM, coupled with the robustness of our models, positions us to navigate market volatility while remaining focused on delivering consistent performance.

The future of investing in India will be shaped by these and other emerging trends, including the increasing role of technology in portfolio management and the growing participation of retail and institutional investors. At Wright Research, we are excited about the opportunities that lie ahead and remain committed to pioneering innovative investment strategies that align with the evolving needs of our clients.