As investors, we can choose from many financial products like stocks, mutual funds, gold, FDs etc. But we are never sure which is the best investment option among all financial products. Where to invest? When to invest? When to book profit? How to deal with market volatility? We keep asking ourselves these questions, but we never get any concrete answers.
To overcome all these challenges, we have come up with a simple all-in-one investment solution: ET Money Genius. Since its launch on 9 February, thousands of Indian investors have started investing with Genius, offering them a personalized investment strategy and allocating their money across different asset classes. Not only that, Genius also monitors market dynamics and rebalances your portfolio to help you achieve your goals with high risk-adjusted returns. To understand this in more detail, you can read our blog Everything You Need to Know About ET Money Genius.
As more and more investors subscribe to ET Money Genius, we are receiving many questions about ET Money Genius as well. These questions are a mixture of gratitude, curiosity, criticism and, most importantly, a genuine desire to learn more about ET Money Genius. Hence, this blog will address the Frequently Asked Questions (FAQs) about ET Money Genius.
1. How is Genius different from Smallcase?
Whether it is an actively managed mutual fund, an index fund or for short, all these instruments are tailored to a particular methodology, theme or investment style. ET Money Genius is completely different in this respect. And to better understand those differences, let’s summarize again what the Genius has to offer.
ET Money Genius is unique in assessing the personality of an investor, which helps him/her to create a highly personalized plan. Furthermore, ET Money Genius gives you access to 6 different strategies that can help you achieve multiple goals ranging from short-term to long-term.
In addition, the Genius algorithm uses several variables such as valuation, inflation, interest rates and price trends when making decisions on asset allocation and rebalancing.
Genius is also a unique investment intelligence service in the sense that it aims to achieve three key objectives: high performance, consistent returns, and excellent drawdown protection.
In addition, Genius Portfolios consistently manage portfolio risk.
Lastly, the Genius Portfolio also has a target date that coincides with your target period. As a result, Genius continues to reduce your portfolio risk as you get closer to your destination.
You are not likely to find all these features in any other financial instrument. And these differentiators make Genius a complete investment solution.
2. How do I move my existing portfolio and SIP to Genius?
With millions of investors on our platform, we wanted to migrate their existing portfolio and SIPs to Genius. This would have been our primary use to improve everyone’s portfolio. So we started working on it and spent few weeks understanding the scenarios, problems, use cases, exceptions etc.
Nevertheless, we found that the scope of an investor’s transfer of their existing portfolio to Genius was vast and very complex. So, after much deliberation, we have settled on building Genius from the ground up.
In other words, for now Genius will not layer your existing investments. But you can use it to plan your future investments smartly. If you have randomly invested in a fund, stock or other financial instrument, you can redeem that money and invest it in the Genius Portfolio.
3. Why is there an allocation of debt and gold in the high growth portfolio and growth portfolio?
Genius is a multi-asset portfolio with an intelligent representation of different asset classes such as Indian Equity, International Equity, Debt and Gold. Thus, Genius Portfolios follow a dynamic strategy and keep changing the asset allocation in your portfolio based on a number of factors such as valuations, inflation, interest rates and price trends.
For example, if gold can go up to 50% in a high growth portfolio, it does not mean that it will always have 50% gold allocation. In the 15 years of backtesting we have done, gold allocation has rarely crossed 30-40% in some highly risky opportunities. The basic idea behind holding debt and gold in the portfolio is to protect and optimize returns and minimize losses through asset allocation and rebalancing.
And it is a multi-asset layer with a rebalancing feature that allows Genius to over-deliver in terms of returns, stability and downside protection.
So, if you want to do the asset allocation yourself, talent may not be the solution. If you are a gifted investor, we highly recommend investing according to our algorithmic-derived asset allocation. And let the system do the hard work of selecting the right assets at the right time and allocating them in the right proportion.
4. Why are some of today’s recommended stocks different from yesterday’s?
It’s genius is that its engine is always working. Thus, when Genius shows you a portfolio, it effectively shows the optimal portfolio for that day based on several factors like valuation, interest rates, inflation, etc.
To put that in context, the stocks you see today may contain many different stocks than yesterday’s inventory. And it’s not just stocks. Even the asset allocation may vary as the genius also looks for the ideal asset allocation on a daily basis.
That said, you don’t need to invest every day. But we highly recommend you to do monthly SIP on a fixed date, which then favors monthly rebalancing, thereby yielding optimum returns.
5. Why do I need to e-Sign?
ET Money Genius is an advisory service offered by ET Money under a Registered Investment Advisory (RIA) license with the market regulator Securities and Exchange Board of India (SEBI).
When you subscribe to ET Money Genius, we create customized portfolios for you and send you recommendations to rebalance your portfolio every month. Hence, you are availing some exclusive service by becoming an ET Money Genius member. And as per SEBI regulations, it is mandatory that the ET Money Genius agreement between the User and ET Money is verified through the signature of the User.
As per SEBI regulations, we need to ensure that it is actually you who are signing up for ET Money Genius membership. That’s why we use aadhaar based e-sign. The safest and most convenient way to certify that it’s actually you signing up for a Genius membership on your behalf. After all, your Aadhaar number is your unique ID. No other resident can have a duplicate number as it is linked to your personal biometrics.
Of course, there are other options as well. The alternative is to take your physical signature. But obviously, we don’t want you to go through the trouble of physically signing all the documents and then sending them to us. That’s why we have come up with e-Sign through Aadhaar to facilitate your investment journey.
We have a detailed blog on eSign that explains the need for this and how you can accomplish this for a Genius membership.
6. Why do the schemes in Genius Portfolio belong to only one mutual fund company (Nippon India)? Is there any option to choose your preferred mutual fund company?
There are some essential components without which talent cannot be made efficient. In the case of mutual funds, it is the availability of index funds. And in the case of stock and ETF strategies, we need ETFs that are essential.
For example, to build a Genius mutual fund portfolio, the mutual fund company you choose should have the following index funds: Nifty 50 Index Fund, Nifty Next 50 Index Fund, Midcap Index Fund, Smallcap Index Fund, A Debt Fund , and an international equity fund.
If an AMC has all these funds, switching from one fund to another becomes very easy, and the process becomes much more efficient.
Now not all mutual fund companies have all these index funds. Only Nippon India Mutual Fund and ICICI Prudential Mutual Fund had the need for an index fund to design a genius portfolio. So we have started with these two mutual fund companies.
Nevertheless, we are looking forward to many fund houses joining the Genius program, and we have already made good progress in our discussions with them. We are expecting a quick turnaround from Aditya Birla Sun Life Mutual Fund, HDFC Mutual Fund, Motilal Oswal Mutual Fund and DSP Mutual Fund, to name a few. As more and more mutual funds file for index funds and ETFs, we will continue to onboard them.
That said, most of the funds or ETFs we use in Genius Strategies tend to be index-based. This means whether you choose Nippon India Nifty 50 Fund or HDFC Nifty 50 Fund, the construction, portfolio, methodology and returns will be broadly similar.
In other words, the strategies we created as part of the Genius Portfolio are not AMC-specific, but they are more about how we use these index funds. Ultimately, Genius Portfolio is all about the right assets at the right time and in the right allocation.
We hope that we have clarified your queries regarding ET Money Genius. If you still have any questions, do share them in the comments section.