Capitalmind Resilient

What Is Capitalmind Resilient?

Capitalmind Resilient is a quantitative, long-only equity PMS that combines low-volatility and profitability factors.

The basic investment idea is counterintuitive:

Lower-volatility stocks do not necessarily have to offer lower expected returns.

Traditional investing theory often associates higher risk with higher expected returns. Low-volatility investing challenges that assumption by focusing on companies whose share prices have historically exhibited lower volatility while also demonstrating fundamental quality.

Resilient attempts to combine these characteristics.

The strategy was launched on 6 September 2021. APMI classifies it as an Equity strategy with the Nifty 50 TRI as its benchmark. APMI reports a minimum investment amount of ₹1 crore. 

The portfolio is designed around approximately 20 stocks that demonstrate relatively lower volatility and other qualifying characteristics under the strategy's quantitative framework. 

The strategy is therefore not designed to provide capital protection.

It remains an equity portfolio and can experience substantial losses when equity markets decline.

Capitalmind Resilient Snapshot

Data reference: APMI disclosure and turnover information available as of the latest reported dates. 

APMI identifies Krishna Kishore Appala as the fund manager and reports 14 years of work experience. 

The current APMI page does not provide a reliable current AUM figure, so an older AUM figure should not be presented as current.

Why Less Volatile Stocks Have Outperformed

The central idea behind Resilient comes from the low-volatility anomaly.

In conventional finance, investors might expect higher-risk assets to compensate investors with higher returns over time.

Yet academic research has documented periods in which lower-risk or lower-volatility stocks have produced attractive risk-adjusted returns.

One explanation is behavioural.

Investors Like Exciting Stocks

Investors are often attracted to stocks that generate attention.

A stock experiencing dramatic price movements can appear more exciting than a relatively stable company whose business performance changes gradually.

This can create an unusual situation.

High-volatility stocks may receive disproportionate investor attention, while less volatile companies receive less excitement.

The Lottery Effect

Some investors are attracted to stocks that offer a small probability of an extremely large payoff.

These lottery-like payoffs can make highly volatile securities attractive even when their expected returns are not necessarily superior.

If investors systematically overpay for these lottery-like characteristics, the future return potential of those securities can be reduced.

Conversely, less volatile stocks can become relatively underappreciated.

Attention and Overconfidence

Investor overconfidence can also contribute.

Investors may believe they can identify the next major winner and therefore prefer securities with dramatic upside potential.

This preference can increase demand for high-volatility stocks.

Resilient takes the opposite approach.

Instead of searching for the most exciting companies, the quantitative process seeks companies displaying lower price volatility combined with fundamental quality.

That does not make the portfolio risk-free.

It simply means that volatility is treated as an important input rather than something that investors must always accept in exchange for potential returns.

How Resilient Combines Volatility and Quality Factors

Low volatility alone is not enough.

A portfolio that simply buys the least volatile stocks could potentially end up owning businesses with weak growth, deteriorating fundamentals or limited profitability.

Resilient therefore combines price-volatility characteristics with fundamental quality/profitability characteristics.

Step 1: Define the investable universe

The strategy begins with a broad universe of investable securities that meet its liquidity requirements.

Step 2: Measure volatility and quality

Stocks are evaluated using a composite quantitative framework that incorporates:

• Price volatility
• Profitability
• Fundamental quality
• Other relevant quantitative characteristics

Step 3: Rank the universe

The algorithm scores and ranks eligible securities according to the composite metric.

Step 4: Select the top-ranked stocks

The strategy allocates to securities that rank in the top decile of the relevant universe.

The objective is to combine two characteristics:

Lower volatility + stronger fundamental quality

This is important because low volatility by itself does not distinguish between a stable, profitable business and a stagnant company whose share price simply does not move very much.

Profitability helps provide another layer of selection.

Why Profitability Matters

Imagine two companies with similarly low stock-price volatility.

Company A has:

• Consistent profitability
• Stable earnings
• Strong operating performance
• Improving business fundamentals

Company B has:

• Low share-price volatility
• Weak profitability
• Stagnant earnings
• Limited fundamental improvement

A pure low-volatility strategy could potentially consider both.

A combined low-volatility and quality framework can differentiate between them.

This is the role of the profitability factor within Resilient.

The strategy seeks companies that are not merely quiet stocks but businesses with relatively steady underlying performance.

That makes the strategy fundamentally different from simply buying the lowest-beta stocks available.

Quarterly Rebalancing and Portfolio Construction

Resilient is rebalanced quarterly.

Quarterly rebalancing means the quantitative framework periodically reassesses the eligible universe and determines whether the securities currently held continue to meet the strategy's requirements.

This creates a systematic mechanism for:

• Removing stocks that no longer qualify
• Adding securities with stronger factor characteristics
• Updating portfolio weights
• Responding to changes in volatility
• Responding to changes in profitability and quality

Rebalancing also creates turnover.

APMI reports a 1-month turnover of 1.24 and 1-year turnover of 3.20 as of 30 April 2026. 

For investors, turnover matters because every portfolio change can have implications for transaction costs and taxation.

The Quantitative Process: Validate, Build, Deploy

A quantitative investment strategy is only as useful as the research process behind it.

Resilient uses an iterative research framework built around three broad stages:

Validate

An investment hypothesis is tested against historical data.

The purpose is to determine whether the proposed factor relationship is persistent enough to warrant further investigation.

Build

The research is translated into a portfolio-construction framework.

This includes defining:

• Security eligibility
• Factor measurements
• Ranking methodology
• Portfolio weights
• Rebalancing rules
• Risk controls

Deploy

Only after the strategy has been tested does it move into live implementation.

The process is then continuously evaluated.

Why data quality matters

Backtesting can produce misleading results if the underlying data is flawed.

Two major problems are:

Survivorship bias: testing only companies that survived until today can make historical results appear stronger than they really were.

Point-in-time bias: using information that was not actually available to investors at the historical date can also distort results.

A more robust quantitative process therefore needs to account for:

• Survivorship bias
• Corporate actions
• Historical liquidity
• Point-in-time information
• Realistic trading constraints

This distinction matters because a backtest is only useful when it attempts to reproduce the information and trading conditions that would actually have existed at the time.

Backtested results should therefore never be interpreted as equivalent to live investment performance.

Resilient vs Capitalmind Adaptive Momentum

Capitalmind Resilient and Capitalmind Adaptive Momentum use different factor philosophies.

Capitalmind positions the two strategies as complementary rather than identical.

The distinction is useful for portfolio construction.

A portfolio containing two momentum strategies can still be heavily exposed to the same factor.

By contrast, combining a low-volatility/quality strategy with a momentum strategy introduces different sources of portfolio exposure.

That does not guarantee diversification.

Both remain equity strategies and can decline together during severe market stress.

Capitalmind Resilient Minimum Investment and Fees

The APMI disclosure reports a ₹1 crore minimum investment for Capitalmind Resilient. 

The reported fee structure is:

• Fixed fee: Nil
• Management fee: 1%
• Profit share: None
• Exit load: Nil

APMI reports a 1% management fee and nil exit load. 

This fee structure is straightforward, but investors should still consider the complete cost of operating a PMS account.

Relevant costs can include:

• Management fees
• Brokerage and transaction costs
• Applicable taxes
• Other account-level expenses

The impact of these costs can become more meaningful when the portfolio is rebalanced regularly.

Key Risks of a Low-Volatility Strategy

The name "Resilient" should not be interpreted as capital protection.

This is an equity PMS.

1. Strong bull-market underperformance

This is one of the most important risks.

When markets are driven by highly volatile, high-beta, mid-cap or small-cap stocks, a low-volatility portfolio can lag significantly.

A strategy that deliberately avoids some of the market's most volatile stocks can naturally participate less in a speculative rally.

2. Factor-cycle risk

Low volatility and quality factors can go through periods of underperformance.

There is no guarantee that a factor that worked historically will outperform during every market cycle.

3. Model risk

The strategy depends on quantitative models.

If relationships between volatility, profitability and future returns change materially, the model may become less effective.

4. Concentration risk

The portfolio focuses on approximately 20 stocks.

This creates meaningful security-specific exposure.

A negative development in one holding can have a noticeable effect on portfolio performance.

5. Rebalancing and tax drag

Quarterly portfolio changes can create realised gains and losses.

Depending on holding periods and prevailing tax rules, frequent transactions may influence the portfolio's tax profile.

6. Small-cap exposure

Although the portfolio has a large-cap core, the strategy can include mid- and small-cap companies.

These securities can have higher liquidity and drawdown risks than large established companies.

7. Market risk

Low volatility does not mean low risk in absolute terms.

During broad equity-market declines, the portfolio can still fall.

8. Key-person and implementation risk

The strategy depends on the research, technology and investment processes used to maintain the quantitative model.

Changes in the investment team or implementation process can affect execution.

Who May Consider Capitalmind Resilient?

Capitalmind Resilient may be relevant for investors who:

• Can meet the ₹1 crore minimum investment.
• Have a long-term investment horizon.
• Prefer systematic investing over discretionary stock selection.
• Want exposure to low-volatility and quality factors.
• Understand that low-volatility strategies can lag during strong momentum-led bull markets.
• Are comfortable with a concentrated portfolio of approximately 20 stocks.
• Are looking for a strategy that can potentially complement momentum-oriented investments.
• Understand that the strategy remains exposed to equity-market risk.

It may also be considered by investors who already have exposure to a momentum-oriented strategy and want to introduce a different factor into their portfolio.

However, diversification should be assessed at the portfolio level.

Holding two quantitative strategies does not automatically create diversification if their underlying holdings or factor exposures overlap significantly.

Investors should therefore evaluate the combined portfolio rather than considering each PMS in isolation.

Explore Other Capitalmind Strategies

Investors comparing different Capitalmind investment approaches can also explore:

Capitalmind Adaptive Momentum PMS

Capitalmind Select India One

Capitalmind Altitude

For a broader understanding of portfolio management services, investors can explore the structure, benefits and considerations associated with PMS.

Investors comparing professionally managed portfolios with direct stock ownership can read PMS vs Direct Equity.

For information about the fund manager, see Krishna Appala.

For further information, contact our investment team.