Two nearly identical screens. One beat the Indian market, one lagged it. The difference was a single line on the income statement.

We built 258 portfolios from this screen, one for every month you could have started, held one, three and five years. Most laggards we have tested hide a consolation: give them time and the odds swing back. This one runs the other way, and that reversal is the honest headline.

Over one year it beat the index in about 46% of starts. Over three years, roughly 42%. Over five, barely 36%. Read that sequence again, because it is rare here: the longer you held this screen, the more reliably the plain index pulled ahead. Where patience is usually the rescue, this time it only made the verdict clearer.

Losing to the index is not the same as losing money

Now the balance. The screen still made money in almost every long window: 95 of every 100 five year holds ended positive, at a median around 13% a year. Its typical single year landed between about −23% and +56%, with the best near +105% and the worst around −45%. An investor who ran it was not ruined; they compounded respectably. They simply earned less than an index fund charging nothing, through a ride that fell nearly 70% at its deepest, which is the combination no one signs up for on purpose.

The fall you had to sit through, start by start

There is no single drawdown number, only a spread. Take every start date and its worst drop over the next five years: the typical one lost about 55% of its value, the unluckiest close to 70%, and even the gentlest starts gave up more than a fifth. Against the index's 34% fall, this basket, three fifths of it micro caps, fell nearly twice as hard, without the extra return that usually justifies such a ride.

What it actually bought

High return on assets plus a low price mostly led the screen down the size ladder, into small industrial and commodity names where accounting profit runs hot and prices run cheap. About three fifths of the basket sat in micro caps. That mix explains both the violence of the falls and, as the teardown shows, part of why bottom line profitability proved a noisier signal than its gross profit cousin.

The lesson is bigger than the screen

Nothing about this idea is foolish. Profitable companies at fair prices is as sound a principle as investing has, and its gross profit cousin proved it on the same data. What failed here is subtler and more useful: return on assets, the bottom line measure, mixes true operating strength with leverage, one off gains and accounting choices, and that noise was enough to turn a winning recipe into a lagging one. The takeaway for any investor is worth the article on its own: before you trust a quality screen, ask exactly which line of the accounts it measures, because a decade of Indian data says that choice, alone, separated beating the market from trailing it.

So we took it to Krest, and ran it through the whole test.