Finvezto Momentum (Satellite Portfolio)
Overview and Guide
Investment Rationale
The Finvezto Momentum Model identifies high-quality companies with strong momentum, designed to potentially outperform the Benchmark Indices over a 3 to 5 year horizon. Suitable for both SIP and lumpsum investments across all market cycles.
Balanced & Dynamic Portfolio: A selection of high-quality companies demonstrating strong price momentum. A maximum of 20 stocks are held at any point in time. Each stock gets an initial weightage of 4% to 7% of the portfolio.
Focused Universe: We target companies listed on NSE with market capitalization above ₹5000 crores, ensuring adequate liquidity and institutional presence while providing exposure across large, mid, and small-cap segments. We avoid Penny stocks/ illiquid stocks.
Rigorous Selection Process: Our Model quantitatively ranks stocks based on quality (financial performance, strength and durability) and price momentum to screen stocks.
Multi-Factor Advantage: By combining quality and momentum factors, the model benefits from complementary investment styles and avoids common pitfalls of single-factor approaches.
Disciplined Risk Management: We relentlessly cut positions when the model suggests a fall in either momentum or quality of a particular stock. We maintain cash reserves when the market does not provide enough opportunities.
Our systematic approach removes emotional bias from decisions and seeks consistent outperformance across market cycles.
How we construct and manage the Finvezto Momentum Portfolio?
These are the frequently asked questions and we request you to read through them carefully before subscribing.
What is our research methodology?
Our Research focuses on identifying stocks with Strong Financials and Strong Price Momentum.
We do this by using a Relative Evaluation Model to rank stocks across Quality, Valuation, and Momentum metrics.
Quantitative scores are assigned to each stock to eliminate and narrow down stocks from the universe.
Final Portfolio Construction prioritizes the top 15-20 stocks with highest rank across Quality, Valuation and Momentum.
This Data-driven methodology ensures disciplined stock selection.
What is the stock universe we operate in?
Finvezto Momentum Portfolio targets companies listed on the National Stock Exchange (NSE) with a minimum market capitalization of ₹5000 crores.
This carefully defined universe includes quality companies across Large/Mid/Small Cap segments and also across industries/sectors, providing a diverse selection pool.
By establishing the minimum threshold of ₹5000 Cr Market Cap, the model deliberately excludes illiquid and penny stocks from the selection universe.
This ensures investments in companies with proven business models, adequate trading volume & liquidity, and institutional presence.
How do we screen stocks?
Step 1: Eliminate low-quality stocks from the universe.
Step 2: From the above list from Step 1, we eliminate stocks that are not showing strong price momentum, both in relative and absolute terms.
Step 3: We have now narrowed down the list to stocks with a minimum acceptable threshold of Quality and Momentum.
Step 4: From the above list, we further eliminate stocks with any other red signals.
Step 5: Final Portfolio Construction prioritizes the top 15 stocks from the above list.
How we allocate weights to each stock in the Portfolio?
The Finvezto Quality Momentum Model allocates 5-7% weightage to each stock position at the time of entry.
This calibrated weighting approach optimizes the risk-reward balance—positions above 7% would introduce excessive concentration risk, while allocations below 5% would dilute potential returns.
We allow winning positions to grow naturally. Post-entry position sizing evolves organically based on price action and momentum strength of individual holdings.
Exit decisions are triggered by deteriorating momentum rather than arbitrary weight or size limits.
The model maintains tactical cash reserves when appropriate, utilizing LIQUIDCASE for capital preservation during limited opportunity environments.
Portfolio composition remains dynamic—we may hold fewer than 15 positions when warranted, such as maintaining 10 stocks at 6% each with remaining capital allocated to LIQUIDCASE.
All allocation decisions respond fluidly to prevailing market conditions, shifting trends, and emerging opportunities.
How We Measure Portfolio Performance? What is your success rate/hit rate?
We take a fundamentally different approach to measuring success compared to traditional analysts. While many focus on "hit rate" or the percentage of winning picks, we believe this metric can be misleading and doesn't capture the true performance of a momentum strategy.
Our Finvezto Momentum Model relies heavily on asymmetric returns - a mathematical approach where outsized gains from a few exceptional performers can more than compensate for moderate losses across several other positions.
For example, a portfolio where 7 stocks each lose 5% (total -35%) but 3 stocks gain 20% each (total +60%) would yield a substantial positive return despite a seemingly poor 30% "hit rate." It is illustrated in the graphic below.
What truly matters is the portfolio's overall risk-adjusted performance relative to benchmark indices over complete market cycles. We measure success by metrics like:
Total portfolio return compared to relevant benchmarks
Volatility levels and maximum drawdowns during corrections
Performance consistency across varying market conditions
The asymmetric approach allows us to focus on what ultimately matters: delivering superior long-term results rather than optimizing for an artificially high win percentage that might look impressive but produce inferior actual returns.
How often do we review Portfolio and Rebalance (Stock Entries & Exits)?
We conduct weekly reviews of all positions with our model providing clear signals for entries or exits. This eliminates emotional decision-making from the investment process.
Rebalancing notifications (Stock Exits and Entries) vary based on market conditions. All Portfolio changes are communicated before market open to ensure timely execution during trading hours.
Following rebalancing notifications promptly is crucial for strategy performance as our signal-driven approach optimizes both returns and transaction costs.
How frequent is the buying and selling?
Entries and Exits are dictated by the model and are not calendarized or arbitrary. When momentum is fading in a stock we exit and replace it with a new stock showing early signs of momentum.
Sometimes there could be several months without any change to the portfolio and sometimes there could be 5 changes in a month. It depends on the model.
Having said the above, we expect the Momentum portfolio to have higher churn relative to other factor models such as Value.
Can I buy only certain stocks from the Portfolio and avoid some stocks?
Our momentum model selects stocks as a cohesive portfolio rather than individual recommendations. The strategy relies on asymmetric returns where exceptional performers balance out underperforming positions.
Cherry-picking only certain stocks fundamentally alters the risk-return profile of the strategy in ways that haven't been tested or validated by our models.
Even if you are particularly drawn to specific stocks, maintaining the designated portfolio weightings is crucial. Please invest in the portfolio as a whole.
What are the Capital Requirements? Should I invest Lumpsum or a SIP?
To subscribe to 1 unit of the Finvezto Momentum Model Portfolio you might need somewhere around ₹50,000 capital. You can check the live details in the link below.
Is there a minimum investment amount for the Finvezto Quality Momentum Portfolio?
The required minimum investment for our momentum portfolio isn't fixed and fluctuates based on current market prices of the constituent stocks. However you can expect to buy 1 unit of the portfolio around ₹50000. The minimum investment amount will be displayed at all times in the Portfolio.
Is there a maximum investment limit for the Finvezto Momentum Portfolio?
There is no specified maximum investment amount for our momentum portfolio.
While you can invest any amount, we recommend this momentum portfolio represent a maximum of 30% of your total investment portfolio alongside other asset classes for proper diversification.
We also recommend consulting with an Investment Adviser to determine the appropriate allocation to momentum strategies within your overall investment plan based on your specific circumstances.
How Will I Know When to Rebalance My Portfolio?
You will receive timely alerts via E-mail, WhatsApp, or in-app notifications (depending on your selected communication preferences) whenever our portfolio changes.
Rebalance notifications are not automatically applied to your portfolio. You will need to manually execute the recommended trades in Smallcase/Brokerage account after receiving our signals.
While there's no strict deadline for implementing rebalances, prompt execution helps maintain alignment with the Finvezto Quality Momentum strategy and avoids performance deviation from our model portfolio.
If you miss rebalance notifications, you can always update to the latest portfolio composition, though this may result in different transaction prices than if executed promptly when first recommended.
What Other Costs involved in buying the Portfolio?
Beyond your portfolio subscription fees:
Brokerage costs (Mostly zero if you choose a discount broker such as Zerodha/Groww as all trades are delivery trades)
Account opening fee (If you do not have a DEMAT account yet)
Quarterly/Annual maintenance fee of your DEMAT account
Smallcase fee - ₹100 for first portfolio
Securities Transaction Tax (STT) on both buy and sell transactions
Depository Participant (DP) charges
GST on brokerage and platform fees (wherever applicable)
Please note that there is no fees incurred for rebalancing the portfolio or adjusting the stock weights in smallcase.
What is the likely tax impact on returns?
Finvezto Quality Momentum Portfolio typically holds stocks for less than 1 year, but a few top-performers can be held for greater than 1 year. Therefore, Short Term Capital Gains (STCG) or Long Term Capital Gains (LTCG) will be applicable based on the scenario.
Short Term Capital Gains are currently taxed at 20%. Short term Capital Gains can also be offset against other Short Term Capital Losses.
Long Term Capital Gains is applicable on portfolio gains in excess of ₹1.25 Lakh and is currently taxed at 12.5%.
Please check the following link for more details and to Subscribe
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