As per current understanding of SEBI Research Analyst (2014) regulations, we have adopted a ‘Percentile’ system for stocks recommended in our strategies.

All investors either by themselves or through a registered investment advisor should do a risk profiling. This is usually done by filling a risk questionnaire against which scores will be given to arrive at a risk rating. Typically, risk rating is classified as low, medium or high to signify risk appetite of an investor.

Percentile is an indicator of the position size or (% allocation) as per their risk appetite. We divide Percentile into three categories – TOP, MIDDLE and BOTTOM. Different investors like to use percentile (and hence, position size) as per their risk appetite.

For example (for illustration purposes only) :

(a) A conservative investor looking to create a diversified portfolio may opt for 2% position size for a BOTTOM percentile stock, 4% for a MIDDLE percentile stock and 6% for a TOP percentile stock.

(b) An aggressive investor looking to create a concentrated portfolio may opt for 4% position size for a BOTTOM percentile stock, 8% for a MIDDLE percentile stock and 12% for a TOP percentile stock.

Please note that these numbers are not hard bound and one can change as per requirements.

Will the Percentile be changed?

Yes, change in percentile is possible and will be communicated to FC subscribers, wherever applicable. Exact allocation needs to be decided by the subscriber accordingly.

(a) We may reduce the percentile from TOP to MIDDLE/BOTTOM or MIDDLE to BOTTOM to indicate reduction in position sizing.

(b) We may increase the percentile from BOTTOM to MIDDLE/TOP or MIDDLE to TOP to indicate increase in position sizing.

Obviously, the BOTTOM percentile cannot be downgraded. Hence, a stock at this level is exited fully at an appropriate time if it does not find place in the strategy.

If you have any other questions regarding the percentile system, feel free to email us on support@fintrekkcapital.com