Katalyst

Medium RiskDiversified
Katalyst
Issued by:Kristal AI
Unit Price (NAV) : $
Minimum investment: 1 unit
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Katalyst

Katalyst

About Kristal

Why this Kristal?
Katalyst is a genetic algorithmic strategy that takes a tactical approach to portfolio construction based on the prevailing market conditions. The algorithm assesses a universe of diverse ETFs for various risk and return parameters. The objective of the strategy is to optimise the utility derived from higher returns subject to volatility constraints. The strategy is overseen by an experienced investment committee that reviews the performance of the Kristal on a regular basis and assesses the appropriateness of the risk constraint in any given market scenario. Targeted asset allocation between Fixed Income and Equity is 40-60 with a 15% tolerance depending on Algo inputs

Once the asset allocation is obtained, Katalyst invests to take tactical positions at a more targeted level than traditional style-based investing for up to 50% of the portfolio. It enables investors to acquire a low-cost exposure to popular, growing sectors like technology, healthcare, industrials, consumer discretionary that have been characterised by solid risk-adjusted returns. To reap the benefit of diversification, Katalyst also takes some exposure in emerging markets, while any remaining cash is kept invested in short term US treasuries.

Recommended for: Ideal for medium-risk profile investors looking for an actively managed strategy that delivers growth via capital appreciation.

Geographic Focus: Global

Market Tier Exposure: Developed and Emerging Markets

Asset Class: Equity, Fixed Income, Commodity

Sector:Diverse

When to buy?
The Kristal performs best in a stable and growing economic environment.

How is this Kristal Managed?
The strategy is dynamically rebalanced on a monthly basis with discretionary oversight of an experienced investment committee. Sectors are carefully chosen using an algorithm in order to deliver optimal risk-adjusted returns based on a medium-risk growth portfolio. Individual allocation within an asset class is further driven by model-driven discretionary tactical trades.

Reference:
Genetic algorithm is a concept that is inspired by Charles Darwin’s theory of the process of natural selection. Such algorithms imitate natural biological processes like mutation, inheritance, crossover and selection. Genetic algorithms are especially good at solving optimisation problems. This makes them highly applicable in the field of finance. They can solve the problem of portfolio rebalancing optimization efficiently.
Learn more about Genetic Algorithm

Why Invest in Katalyst?

Ideal for medium-risk profile investors looking for an actively managed strategy that delivers growth via capital appreciation.

When to Invest in Katalyst?

The Kristal performs best in a stable and growing economic environment.

Returns

Returns1Y
Katalyst22.47%

Similar Kristals

  • All Weather US - Unleveraged

    Why this Kristal?
    The All Weather portfolio philosophy is to create a portfolio that is able to generate a return equivalent or in excess of broad GDP growth over an extended period of time. It brings together investment in 3 main Asset Classes: Fixed Income, Equity and Commodity. The weightings between these 3 asset classes determine the success of the strategy. A broad guidance that has been tested over time is an allocation of ca. 55% to Fixed Income split between medium and longer term bonds, 30% Equities and 15% commodities.

    The portfolio will perform based on the assumed correlation between different asset classes. Strong economic growth will support equities and commodities but at the expense of fixed income. In a recession, rates trend lower and since lower rates mean higher prices for bonds, the gains of this section of the portfolio will mitigate losses from a slump in equities. In an inflationary scenario, which is hurtful for both equity and fixed income, the commodity allocation will act as a buffer to negative impacts from both markets.

    We have further refined our strategy by including inflation linked bonds as part of the allocation in the fixed income space.

    Recommended for: Ideal for investors looking to gain a diversified exposure to various asset classes with the objective of balanced growth.

    Geographic Focus: US

    Market Tier Exposure: Developed Markets

    Asset Class: Fixed Income, Equity, Commodity

    When to buy?
    The Kristal provides consistent performance through most market conditions. It is therefore ideal in times of economic uncertainties. Due to the growth component of equities, the Kristal is also placed well for regular periodic investments.

    How is this Kristal Managed?

    The Kristal is regularly rebalanced to maintain targeted asset allocations:

    • 55% Fixed income (10% Inflation linked treasuries, 30% Long Duration Bonds, 15% 3-7yr duration bonds)
    • 30% Equity (Broad US Market ETF, e.g. S&P 500, Total Stock market ETF, etc)
    • 15% Commodities (Gold, and/or broad commodity tracking ETF)

    Fluctuations of up to 10% between each of the asset classes are allowed.

    Reference:
    The Kristal follows the investment philosophy of Ray Dalio, the founder of Bridgewater Associates managing about $160 billion for approximately 350 of the largest and most sophisticated global institutional clients including public and corporate pension funds, university endowments, charitable foundations, supranational agencies, sovereign wealth funds, and central banks.
    4 Factors Ray Dalio uses to construct his All-Weather portfolio

    Medium Risk2-5 years
    10.23%
    1 unit
  • All Weather US - Unleveraged

    Why this Kristal?
    The All Weather portfolio philosophy is to create a portfolio that is able to generate a return equivalent or in excess of broad GDP growth over an extended period of time. It brings together investment in 3 main Asset Classes: Fixed Income, Equity and Commodity. The weightings between these 3 asset classes determine the success of the strategy. A broad guidance that has been tested over time is an allocation of ca. 55% to Fixed Income split between medium and longer term bonds, 30% Equities and 15% commodities.

    The portfolio will perform based on the assumed correlation between different asset classes. Strong economic growth will support equities and commodities but at the expense of fixed income. In a recession, rates trend lower and since lower rates mean higher prices for bonds, the gains of this section of the portfolio will mitigate losses from a slump in equities. In an inflationary scenario, which is hurtful for both equity and fixed income, the commodity allocation will act as a buffer to negative impacts from both markets.

    We have further refined our strategy by including inflation linked bonds as part of the allocation in the fixed income space.

    Recommended for: Ideal for investors looking to gain a diversified exposure to various asset classes with the objective of balanced growth.

    Geographic Focus: US

    Market Tier Exposure: Developed Markets

    Asset Class: Fixed Income, Equity, Commodity

    When to buy?
    The Kristal provides consistent performance through most market conditions. It is therefore ideal in times of economic uncertainties. Due to the growth component of equities, the Kristal is also placed well for regular periodic investments.

    How is this Kristal Managed?

    The Kristal is regularly rebalanced to maintain targeted asset allocations:

    • 55% Fixed income (10% Inflation linked treasuries, 30% Long Duration Bonds, 15% 3-7yr duration bonds)
    • 30% Equity (Broad US Market ETF, e.g. S&P 500, Total Stock market ETF, etc)
    • 15% Commodities (Gold, and/or broad commodity tracking ETF)

    Fluctuations of up to 10% between each of the asset classes are allowed.

    Reference:
    The Kristal follows the investment philosophy of Ray Dalio, the founder of Bridgewater Associates managing about $160 billion for approximately 350 of the largest and most sophisticated global institutional clients including public and corporate pension funds, university endowments, charitable foundations, supranational agencies, sovereign wealth funds, and central banks.
    4 Factors Ray Dalio uses to construct his All-Weather portfolio

    Medium Risk2-5 years
    10.23%
    1 unit

    Projected Returns

    Investment ofper month
    gives returns of :
    at 11.80% / annum
    $in 1 years
    amount
    for a time period of
    time1Y
    Returnsbased on historic SIP returns of 11.80% per annum
    $
    $
    $+ 11.80

    Scheme Information

    Sharpe 0.69
    Volatility 12.52%
    Max drawdown -13.19%

    Dealing Information

    Subscription & redemption: Daily
    Valuation: Daily
    Notice period for subscription: 1 business day
    Notice period of redemption: 2 business days
    Redemption settlement: 5 business days

    Strategy - How is this Kristal managed ?

    The strategy is dynamically rebalanced on a monthly basis with discretionary oversight of an experienced Investment Committee. Sectors are carefully chosen using an algorithm, in order to deliver optimal risk-adjusted returns based on a medium-risk growth portfolio. Individual allocation within an asset class is further driven by model-driven discretionary tactical trades.

    38.45%
    Fixed Income
    1.12%
    Cash
    8.86%
    Commodities
    51.58%
    Equity

    Fact Sheets & Reports

    Updates

    4 Jan, 2020

    In our effort to ensure optimal performance of our Kristals, we have updated our algorithm for the Katalyst Kristal with the latest price data. The algorithm has proposed an extension of duration for the fixed income allocation in the Kristal, while removing the gold allocation. The overall distribution between fixed income and equity remains broadly unchanged in the 39:61% area. With increased tension in the Middle East, we are also taking in profit on our Wisdom Tree Middle East ETF position, which was initiated based on an algorithm recommendation on 5th November, to return around 3.3% at the close of markets on 1st January. The sector allocation to health care equipment is new with a 12% allocation. We have also increased the allocation to the iShares US Technology Software ETF from 8% to 16%.

    2 Jun, 2020

    The strategy has done well throughout the year. Despite the major sell off in March, we are as of 2. June up +4% since Jan 1st, a very respectable result for a balanced portfolio. We have consistently achieved a positive alpha over a Benchmark consisting of 50% ACWI and 50% LQD which is representative of the investment strategy. (+14% alpha in May, +5% YTD) To ensure that this stays the way, We have updated earlier this week our Advisory Algorithm with the latest market data and are rebalancing the Katalyst now accordingly. Based on our Genetic Algorithm, the allocation to Fixed Income Instruments has been reduced by 18%, with 10% moving to Gold and 8% towards additional Equity Allocation. within the Equity Sector allocation, where we are reducing the exposure to the technology sector, which has been a large contributor of the Performance in May, and shift towards an allocation of 18% to the SPDR Utilities Select ETF (XLU). The Utilities sector has been outstanding in Q1 with regards to its earnings compared to the other sectors in the S&P, and is one of the last sectors that still shows a flat to slightly positive expectation of Earnings growth in Q2.

    10 Sep, 2020

    September Rebalancing: There have been only minor changes to the existing portfolio in terms of asset allocation since the last adjustment in June. In our equity allocation, our Algo is switching from the SPDR Utilities ETF to the State Street Financials ETF, as well as a slight increase in tech sector exposure from 22.5% to 30%. In addition to these changes, under our discretionary mandate we are slightly over-weighting the allocation to Gold over Fixed Income (6%). The risk mitigating properties of Fixed Income instruments at the zero rates boundary have changed, so in line with our investment committee's strategic views, we are maintaining a slightly higher allocation to this asset class. The second adjustment is that we are adding to our tech sector exposure by diversifying from US domiciled Tech companies to include the Emerging Markets Internet and E-commerce ETF (EMQQ). This ETF has been proposed through our model which measures the attractiveness of an ETF within its sector based on its relative momentum, strength of trend and historic performance.

    23 Mar, 2021

    Rebalancing March 2021: While the IC decided in December 2020 that no rebalancing of the strategy was required, we have seen and implemented a number of changes in the March rebalancing. While the Volatility limit at 13% remained unchanged, the Algo recommendation suggested an increase in fixed income allocation, although focusing on shorter duration 3-7yr US Treasury Bond ETF at the expense of the 10-20yr Bond ETF. The biggest changes happened in the equity allocation of the portfolio . We have exited positions in the iShares Expanded Tech-Software ETF, SPDR Healthcare Equipment ETF and the Emerging Market Internet & E-Commerce ETF. Additions to the strategy have been the ARK Next Generation Internet ETF, Vanguard Extended Market Index ETF and the ASHR China A-shares ETF.

    Katalyst