Backtests and Simulation Results:
- Backtest models are constructed using a limited set of assumptions about market conditions and portfolio characteristics; therefore, backtest results should not be interpreted as indicative of actual past performance in real-world conditions.
- Backtest results and Simulation results should never be used as a basis for comparing the actual performance of other intermediaries.
- Backtest and simulation outputs are provided solely as factual data to support comparative assessment of my subscription plans. They highlight the model’s potential in relation to the portfolio’s investment rationale and parameters under the stated investment methodology.
- Simulation results are derived from 10,00,000 trials and represent potential future scenarios based on normalised inputs (average returns and return volatility) obtained from backtesting.
- Users are strongly advised to exercise extreme caution when using this information.
- These back-test results and simulation have not been verified by PaRRVA (Past Risk and Return Verification Agency) or any other SEBI-recognized agency.
- The impact of periodic portfolio rebalancing and transaction costs has been factored into these back-test results.
- "Backtesting and simulation results do not serve as indicators of future performance or guarantees of returns and they should not be interpreted as an endorsement or advertisement."
Simulation Assumptions:
- Monthly Portfolio Returns are assumed to follow a normal distribution over a 20-year horizon, with mean returns and volatility presumed to mirror historically observed levels.
- Portfolios are rebalanced once monthly.
- Portfolio risk level and Sharpe ratio are assumed to remain unchanged over the 20-year period.
- Other than the initial lump sum investment, no additional contributions or withdrawals are made over the 20 years period.
- Portfolio rebalancing is assumed to be unconstrained by liquidity over the 20‑year period: required quantities of each security can be bought or sold at competitive prices on every rebalancing, and transaction volumes are assumed to have a negligible impact on market prices.
- Earnings from dividends are ignored.
- Simulation results are not adjusted for inflation rates.
- Effects of taxes on the capital appreciation (Capital Gains Tax & Taxes on Dividends) are not accounted.
Simulation Settings:
- Transactional costs are included in the Sharpe ratio calculations.
- Risk free rate is assumed to be 6.5% p.a.
- Each simulation value is resulted from 10,00,000 simulation trials using the Monte Carlo method.
- Simulation results are derived for probability levels (confidence levels) of 99.9%, 99%, 98%, 95% and 90%.
- Simulation values do not predict or reflect future market conditions; they represent only possible future outcomes.