Software to aid equity investment!

R. Yegya Narayanan Coimbatore | Updated on January 24, 2011

Chennai based software company Naethra Technologies (P) Ltd is readying to launch later this month a proprietary software that would aid them to take investment decisions based on a fundamental analysis of companies’ performance at the click of a mouse.

Mr.Narayanan Kumar, a former GM (Fund Accounts) of Unit Trust of India (UTI), Mumbai, who had developed the algorithm based on which the investment software christened `Genie’ has been developed by Naethra Technologies, told Business Line, based on capital market data from Jan 1, 2004 to Sept 30, 2009, about 95 model portfolios each consisting of about 20-25 different shares have been developed.

The first module was an all cap module but it has a steering mechanism under which in an overheated market condition it may `choose to give preference to large cap stocks'. There were at present two risk options for the investors- a high risk option and medium-risk option and two different methodologies have been adopted to suit respective investor risk appetites. Nearly 45-50 portfolios were developed under each category.

Asked whether the efficacy of the model portfolios had been validated, he said at the testing done around April 2010 when the first portfolio was about 6 years old, the return of each portfolio was compared with the return of the BSE sensex. Other parameters like BETA, portfolio PE etc were also considered. It was found that the portfolios developed had done `very well' and the `average outperformance of the portfolios was around 65 per cent and 85 per cent of the portfolios developed had outperformed the Sensex. While 5 per cent of the portfolio's return was similar to Sensex, the balance 10 per cent was slightly less than Sensex.

The performances of various mutual fund houses was also analysed and even some of the best fund houses found it very difficult to match even the Sensex.

There would be alerts in case of any corporate announcements like bonus/ rights issues and tracking of portfolio performance, generation of profit and loss account etc also would be possible. The company has tied up with an outside agency for data relating to stock markets and this data will be continuously updated.

Asked whether he was looking at the software as an alternative to investing in mutual funds or in PMS as it does the job of a fund manager, Mr.Kumar said Genie `is literally a fund manager at home'. But the company was not `positioning it as something which is in competition to mutual fund'.

Mr. N.P. Murali, Chief Operating Officer (COO), Naethra Technologies Pvt Ltd, said Genie was developed to help investors with `a long term focus of over 5 years’ and was not a tool for short term investment or for speculation.

Mr.Murali said the product would be available on a Software-As-A-Service (SaaS) model and the users will be able to login to the system through the web.

Published on January 24, 2011

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