I have described the Dogs of the S&P CNX Nifty strategy before. Today we are going to look at a variation of this strategy called the Small Dogs of the S&P CNX Nifty.
This strategy works as follows:
- Find the Dogs of the S&P CNX Nifty.
- Invest in the 5 lowest priced stocks. The rationale behind this rule is that lower priced stocks may give higher returns.
- Repeat this process every year.
The returns over the last 5 years are as follows:
- 2008= -37.31
- 2009= 169.60
- 2010= 20.64
- 2011= -10.01
- 2012= 11.47
The annualised return for the last 5 years is 15.39%
The annualised return for the S&P CNX Nifty for the last 5 years is -0.79%
This is again a simple strategy which anybody can follow. This has higher returns than The Dogs of the S&P CNX strategy over the last 5 years. However this is likely to be have more volatile returns. But one advantage is because we are using low priced stocks, this is also suitable for a individual investor who is investing small amounts of money.
The detailed data used to calculate the returns can be found from the spreadsheet here.