A study by Ambit Capital concludes that companies enjoying a political nexus seldom make handsome gains for investors.It says if a fund manager is mandated to deliver returns over a short time frame, staying away from politically-linked stocks is a sure way to boost risk-adjusted returns.Its P-75 index, a subset of BSE 500 stocks, conceptualised in 2009, comprises 75 companies whose core competitive advantage by its assessment is on account of 'political connectivity'. "We have repeatedly used the index as a barometer for how much those in power in the country want to help certain corporates," state Ritika Mankar Mukherjee and Aditi Singh, authors of the report.According to them, the P-75 index has severely underperformed the broader market across time horizons, whether a year, three years or five years. "The spread between median returns for the BSE 500 and P-75 index is widest for the one-year horizon, at 19 percentage points," their report adds.The other interesting point in the ...
