Backtesting of the icTracker v/s major world indices
The icTracker is a ground breaking Intellectual Capital tracking tool. In using Intellectual Capital to
explain the difference between the market price and book value of a stock, it seeks to quantify the value of intangibles
in the business that the market has already factored into its pricing calculations for the stock. However we wanted to be
absolutely sure. Hence we asked the following questions of icTracker :
- Does the intrinsic stock price that icTracker calculates, mirror the actual market price of the stock?
- Can recommendations from the icTracker be used by a fund manager as the basis for actually investing
in the stock market?
The only way to answer these questions definitively and set at rest all doubts about the effectiveness of the icTracker was
to Backtest its recommendations. And this is exactly what we did.
Backtesting methodology
The icTracker calculates the intrinsic value of stocks it tracks every quarter, as soon as their financial results
are declared. Hence to back-test the icTracker, we created a portfolio based on the recommendations
from icTracker starting ten years ago, and thereafter rebalanced this portfolio every quarter depending on the new
recommendations from icTracker for the quarter. We selected the leading Bluechip and Broad market indices as our benchmarks.
Our goal was to establish that an icTracker based portfolio outperforms every benchmark index over the long term.
We started with 100,000 in local currency and conducted our trades in the middle of the quarter, in order to
budget sufficient time for all results from the previous quarter to be announced. We also factored in brokerage charges of 0.1%
per transaction and included the impact of corporate actions on active stocks in our folio. Here are the results.
icTracker Backtesting results
| Country | Index type | Performance of icTracker v/s | Start Date | End Date | Index CAGR | icTracker CAGR |
| India | Bluechip | BSE SENSEX | 31 Dec 2013 | 31 Dec 2023 | 13.42% | 42.96% |
| Nifty 50 | 31 Dec 2013 | 31 Dec 2023 | 13.69% |
| Broader Market | BSE 200 | 31 Dec 2013 | 31 Dec 2023 | 15.13% |
| Nifty 500 | 31 Dec 2013 | 31 Dec 2023 | 15.58% |
| Midcap | Nifty Midcap 50 | 31 Dec 2013 | 31 Dec 2023 | 20.72% |
| United States | Bluechip | DJ Industrial Avg | 31 Dec 2013 | 31 Dec 2023 | 9.09% | 12.72% |
| Broader Market | NYSE US 100 | 31 Dec 2013 | 31 Dec 2023 | 6.67% |
| DJ Composite Avg | 31 Dec 2013 | 31 Dec 2023 | 8.24% |
| SnP 500 | 31 Dec 2013 | 31 Dec 2023 | 10.46% |
These results provide conclusive evidence that an icTracker based portfolio has outperformed every major stock market index over the long term.
If you have any questions about the icTracker backtesting, have a comment or otherwise want to provide feedback,
please Contact Us.