Investment strategy 7: Small Dogs of the S&P CNX Nifty

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:

  1. Find the Dogs of the S&P CNX Nifty.
  2. Invest in the 5 lowest priced stocks. The rationale behind this rule is that lower priced stocks may give higher returns.
  3.  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.

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