Key Takeaways
- • QAW delivered +7% returns in January 2026 while Nifty50 declined 3%, representing 10 percentage point outperformance driven by higher gold allocation and dynamic derivative hedging during equity market weakness.
- • Gold allocation and tactical hedging framework proved effective portfolio diversifiers, with gold acting as a strong hedge during equity drawdowns while derivative overlays protected downside risk without constraining upside during rallies.
- • Qode Advisors employs a dynamic hedging methodology that adjusts across market cycles—hedges activate during sustained weakness and scale down during strong uptrends to minimize cost drag and optimize risk-adjusted returns.
- • Rishabh Nahar transitioned from subjective, fundamental-driven investing (pre-2016) to a systematic, quant-based investment philosophy, founding Qode in 2016 and launching external capital management in 2018 to enforce discipline and reduce emotional decision-making.
- • QAW positions itself as a low-volatility, diversified "all-weather" strategy, emphasizing earnings durability, policy scenario analysis, sector diversification, and global liquidity considerations to navigate high-valuation, uncertain macro environments.
Summary
Qode Advisors' QAW diversified, low-volatility portfolio strategy significantly outperformed its benchmark during January 2026 market turbulence, delivering approximately 7% returns while the Nifty50 declined 3%—a 10 percentage point spread that underscores the efficacy of the fund's risk management framework. According to Rishabh Nahar, Partner and Fund Manager at Qode Advisors, this outperformance stemmed from two primary mechanisms: elevated gold allocation and dynamically managed derivative hedges that provided downside protection without sacrificing upside participation.
The dual-layer protection strategy reflects Qode's systematic approach to portfolio construction. Gold functioned as a meaningful diversifier during the equity drawdown, while the derivative hedge specifically protected the equity component during market weakness. Nahar explained that the hedging framework is not static; rather, it adjusts dynamically based on market direction and trend signals. When markets exhibit sustained weakness, hedges are activated to reduce downside exposure. Conversely, during strong uptrends, hedges are scaled down or removed entirely to avoid unnecessary cost drag and allow full participation in rallies. This cycle-aware approach to tactical hedging distinguishes QAW from static allocation models that carry perpetual hedging costs regardless of market regime.
Nahar's investment philosophy reflects a deliberate transition from subjective, fundamental-driven stock picking to quantitative, rules-based decision-making. Prior to 2016, he employed traditional bottom-up analysis, meticulously evaluating over 70 businesses through management meetings and factory visits. However, recognizing the limitations of subjective approaches, he founded Qode in 2016 and began managing external capital in 2018. The pivot to quant-driven investing was designed to reduce emotion, enforce discipline, and eliminate reliance on forecasting accuracy—a particularly relevant consideration given current market uncertainties.
For the broader FY26 outlook, Qode's macro framework emphasizes India's structural growth combined with global currency devaluation as drivers of a potential bull market, though tempered by recognition of elevated valuations and policy uncertainty. Nahar advocates a disciplined framework that prioritizes earnings durability over price action, builds policy scenarios rather than relying on single forecasts, emphasizes sector diversification with focus on capex-backed growth stories, and maintains robust risk management to navigate global liquidity dynamics. This multi-layered approach—blending macro awareness, quant rigor, and human oversight of model design—aims to deliver consistent risk-adjusted returns across varying market regimes.
The dual-layer protection strategy reflects Qode's systematic approach to portfolio construction. Gold functioned as a meaningful diversifier during the equity drawdown, while the derivative hedge specifically protected the equity component during market weakness. Nahar explained that the hedging framework is not static; rather, it adjusts dynamically based on market direction and trend signals. When markets exhibit sustained weakness, hedges are activated to reduce downside exposure. Conversely, during strong uptrends, hedges are scaled down or removed entirely to avoid unnecessary cost drag and allow full participation in rallies. This cycle-aware approach to tactical hedging distinguishes QAW from static allocation models that carry perpetual hedging costs regardless of market regime.
Nahar's investment philosophy reflects a deliberate transition from subjective, fundamental-driven stock picking to quantitative, rules-based decision-making. Prior to 2016, he employed traditional bottom-up analysis, meticulously evaluating over 70 businesses through management meetings and factory visits. However, recognizing the limitations of subjective approaches, he founded Qode in 2016 and began managing external capital in 2018. The pivot to quant-driven investing was designed to reduce emotion, enforce discipline, and eliminate reliance on forecasting accuracy—a particularly relevant consideration given current market uncertainties.
For the broader FY26 outlook, Qode's macro framework emphasizes India's structural growth combined with global currency devaluation as drivers of a potential bull market, though tempered by recognition of elevated valuations and policy uncertainty. Nahar advocates a disciplined framework that prioritizes earnings durability over price action, builds policy scenarios rather than relying on single forecasts, emphasizes sector diversification with focus on capex-backed growth stories, and maintains robust risk management to navigate global liquidity dynamics. This multi-layered approach—blending macro awareness, quant rigor, and human oversight of model design—aims to deliver consistent risk-adjusted returns across varying market regimes.
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