Govinda Bhadada
Founder & Chief Investment Officer
"We've developed best-in-class tactical asset allocation and algotrading models for Indian markets based on advanced quantitative research. Only four to five firms throughout the world provide a tactical asset allocation strategy, and all other tactical asset allocation funds, with the exception of Capital Compound are based in the United States and trade US markets. Only Capital Compound specializes for Indian markets", highlights Govinda Bhadada, Founder & Chief Investment Officer, Capital Compound. In an exclusive interaction with CEO Insights, Govinda walks us through his personal and professional life along with unique traits of the company.
Tell us about your professional back ground and experiences. What inspired you to venture into the investment domain and entrepreneurship?
Following my MBA, I worked in management consulting and M& A consulting at KPMG and PwC India before going full-time into trading and investment. I gained practical experience in over 25 industries and sectors across the country while serving in each of these roles. I enrolled in the five year integrated programme in management (IPM) at IIM Indore, while it was still in its in fancy, ours was only the second batch. During masters, I was the batch topper. I joined the Investment Club 'Voyage Capital' at IIM Indore, in 2016. Our fund generated over 15 percent alpha for its investors during the year, which fueled my enthusiasm for investing. I have also finished all levels of the CFA Institute's(US), Certified Financial Analyst(CFA) curriculum and was awarded a CFA charter this year.
Share with us the expertise you
have acquired so far and how do you apply them in your current role?
I was a longterm stock investor until 2018. By that time, I'd read about over 1,000 publicly traded Indian companies, and had studied business models & economics for more than 30 industries and sectors. In the first half of 2019, I became acquainted with trading and discovered that, despite the fact that few people pick trading as a career, traders account for a disproportionately big portion of the world's highest tax payers.
So, I started trading O'Neil's strategies, and as I learned more about them, I learned about Mark Minervini, Pradeep Bonde, and Kristan Qullamaggie, all of whom were trading champions, and Mark was an O'Neil disciple. Using the same process, we achieved a return of 60 percent from May 1, 2021 to April 30, 2022, which was our highest annual performance ever, and this was against a Nifty return of around 17 percent during the same period. During the Jan Feb slump, our portfolio lost only 3.5 percent versus 14 percent for the Nifty, giving us an absolute reward-to-risk ratio of approximately 16x versus only 1.3x for the Nifty.
Define Capital Compound as an organization and where is it positioned in the industry? What are the company's greatest strengths and unique propositions that it offers to its clients?
I began reading about tactics employed by various types of funds, including mutual funds, PMSes, AIFs, algo trading funds, and highfrequency trading funds. And I saw a pattern, the best of the bunch was the one with the fewest draw downs. And as I began to learn more about combining fundamentals and technicals, it became evident that trading rules considerably reduced draw downs, allowing the investment to protect capital and generate much higher returns with much lower volatility, so significantly boosting the reward-to-risk ratio. I founded Capital Compound, a proptrading firm, based on the same concepts. Capital Compound is a quantitative research and trading organization specializing in the development of quantitative trading and investment models to time Indian markets. Capital Compound was founded with the goal of delivering consistent alpha along with sub five percent draw downs to deliver considerably superior portfolio volatility adjusted (reward-to-risk) metrics.
How do you maintain the perfect balance between your personal and professional life? What is your success mantra?
It's challenging to strike a balance between your personal and business lives as an entrepreneur. Every day, I used to spend over 16-18 hours researching the finest techniques and tactics for generating alpha in Indian markets. Now, I devote a significant amount
I was a longterm stock investor until 2018. By that time, I'd read about over 1,000 publicly traded Indian companies, and had studied business models & economics for more than 30 industries and sectors. In the first half of 2019, I became acquainted with trading and discovered that, despite the fact that few people pick trading as a career, traders account for a disproportionately big portion of the world's highest tax payers.
So, I started trading O'Neil's strategies, and as I learned more about them, I learned about Mark Minervini, Pradeep Bonde, and Kristan Qullamaggie, all of whom were trading champions, and Mark was an O'Neil disciple. Using the same process, we achieved a return of 60 percent from May 1, 2021 to April 30, 2022, which was our highest annual performance ever, and this was against a Nifty return of around 17 percent during the same period. During the Jan Feb slump, our portfolio lost only 3.5 percent versus 14 percent for the Nifty, giving us an absolute reward-to-risk ratio of approximately 16x versus only 1.3x for the Nifty.
Define Capital Compound as an organization and where is it positioned in the industry? What are the company's greatest strengths and unique propositions that it offers to its clients?
I began reading about tactics employed by various types of funds, including mutual funds, PMSes, AIFs, algo trading funds, and highfrequency trading funds. And I saw a pattern, the best of the bunch was the one with the fewest draw downs. And as I began to learn more about combining fundamentals and technicals, it became evident that trading rules considerably reduced draw downs, allowing the investment to protect capital and generate much higher returns with much lower volatility, so significantly boosting the reward-to-risk ratio. I founded Capital Compound, a proptrading firm, based on the same concepts. Capital Compound is a quantitative research and trading organization specializing in the development of quantitative trading and investment models to time Indian markets. Capital Compound was founded with the goal of delivering consistent alpha along with sub five percent draw downs to deliver considerably superior portfolio volatility adjusted (reward-to-risk) metrics.
How do you maintain the perfect balance between your personal and professional life? What is your success mantra?
It's challenging to strike a balance between your personal and business lives as an entrepreneur. Every day, I used to spend over 16-18 hours researching the finest techniques and tactics for generating alpha in Indian markets. Now, I devote a significant amount
of time to reading and researching ways to broaden our expertise to algo trading, long term equity portfolios, fixed income products and REITs. Things have significantly improved over time as these systems and processes have been developed, and the daily commitment I require to identify new ideas and opportunities has decreased. I don't believe in a single success mantra. I believe only in habits and systems, and that you reap what you sow.
Going forward, what are your goals that you wish to invest in and how do you plan to take them further?
We would be diversifying portfolios in uncorrelated alpha generation strategies. Trading uncorrelated or negatively correlated systems are essential especially when one starts trading on large sums of money as it substantially reduces volatility of portfolio value at an aggregate level. With our aim to bring more proptrading desk (institutional) grade investment products for retail investors in India, we have recently started to scale up on our algotrading offering, which has generated over 35 percent CAGR historical performance over a six year period with a drawdown of less than four percent, which is a risk-to-reward of more than 9x.
The strategy is market neutral, i.e., it makes money in bearish, bullish, as well as range bound markets, over 90 percent of months have been positive, and every year, as well as every monthly rolling year, has been profitable. The absolute worst annual performance was +15 percent, which is over 1.3x of Nifty50 long term CAGR of about 10-12 percent, and the strategy has generated a cumulative alpha of 400 percent, over Nifty50 returns through the last six years. Apart from algo trading, we have been building profitable hedging and shorting models so we can protect our equity trading account value when markets correct.
Govinda Bhadada, Founder & Chief Investment Officer, Capital Compound
Govinda is a self-employed trader and investor who is passionate about building long term wealth. He excels at algo trading, tight stops trading, and has extensive knowledge of VCP, put option purchasing, and anticipatory trading strategies.
Favorite Cuisine:Indian & Lebanese
Favourite Travel Destination:
All hill stations & treks in Himachal Pradesh, Slovenia
Favorite book:
All three books by Mark Minervini - ‘Trade like a stock market wizard', ‘Think and trade like a champion' and ‘Mindset secrets for winning'
Hobbies:
Playing badminton & regular gymming
Going forward, what are your goals that you wish to invest in and how do you plan to take them further?
We would be diversifying portfolios in uncorrelated alpha generation strategies. Trading uncorrelated or negatively correlated systems are essential especially when one starts trading on large sums of money as it substantially reduces volatility of portfolio value at an aggregate level. With our aim to bring more proptrading desk (institutional) grade investment products for retail investors in India, we have recently started to scale up on our algotrading offering, which has generated over 35 percent CAGR historical performance over a six year period with a drawdown of less than four percent, which is a risk-to-reward of more than 9x.
The strategy is market neutral, i.e., it makes money in bearish, bullish, as well as range bound markets, over 90 percent of months have been positive, and every year, as well as every monthly rolling year, has been profitable. The absolute worst annual performance was +15 percent, which is over 1.3x of Nifty50 long term CAGR of about 10-12 percent, and the strategy has generated a cumulative alpha of 400 percent, over Nifty50 returns through the last six years. Apart from algo trading, we have been building profitable hedging and shorting models so we can protect our equity trading account value when markets correct.
Govinda Bhadada, Founder & Chief Investment Officer, Capital Compound
Govinda is a self-employed trader and investor who is passionate about building long term wealth. He excels at algo trading, tight stops trading, and has extensive knowledge of VCP, put option purchasing, and anticipatory trading strategies.
Favorite Cuisine:Indian & Lebanese
Favourite Travel Destination:
All hill stations & treks in Himachal Pradesh, Slovenia
Favorite book:
All three books by Mark Minervini - ‘Trade like a stock market wizard', ‘Think and trade like a champion' and ‘Mindset secrets for winning'
Hobbies:
Playing badminton & regular gymming