The battle for SAMVAT 2076 is not between large-cap, Midcap and Small-cap. The battle is for making an efficient portfolio of investments. This article does not recommend any stock names or Mutual Fund scheme names but it shows the road map for deciding to construct the portfolio of investments. I find SAMVAT 2076 to be the year of change in the behavioural aspect of investments and throwing away the traditional loophole based approaches. One needs to understand the concept of the portfolio construction being decided upon in Samvat 2076. In the last SAMVAT, we understood many things out of which one of the key aspects is frame a universal to reduce downside without focusing much on the upside. Rather don’t predict upside based on the rock bottom macro numbers, rather focus on the downfall to be adjusted.
One of the biggest questions which have been revolving across everyone is what to be expected from SAMVAT 2076 in terms of investment returns. I find a question like where one should have a higher allocation –Large Cap, Midcap or Small cap. Well, we are simply asking wrong questions and we are completely ignoring the learning from the previous SAMVAT 2075. Avoid Fanaticism in return expectation and make it a realistic approach. Few people think that to get a high return from the investment portfolio on needs to have a complex approach and rocket science methodology to have an 18% to 20% + return portfolio. Well, this illusion concept should be avoided.
SAMVAT 2076 is more important to understand and change the behavioural aspect of investment. The portfolio construction in SAMVAT 2076 is all about understanding the behavioural aspect and then taking a decision for the same. One’s portfolio should be sustainable for long term wealth creation.
The theme of the portfolio selection is the key aspect to be checked upon. When it comes to stocks the underline theme should be to understand the company and its sustainable business model. Good governance, capital efficiency are the two key parameters to be kept in mind while designing the portfolio of investments.
When it comes to Mutual Fund the biggest governance aspect comes into play is the risk-adjusted, leveraged business operation developed in managing the Fund house or a particular scheme. One of the biggest lessons we learn from SAMVAT 2075 is that governance cannot be ignored at the time of taking g decision related to investments. Good governance, quality board members and risk-adjusted approach are going to be the key parameters for selecting any portfolio of investments.
The tax cut down the decision of the Indian government will help corporate India to cut down its debt. But the growth of the economy and market are both dependent on demand. The demand plays a pivotal role in deciding upon the corporate profit and sustainable business growth. The Trade war and domestic liquidity crunch are enough to keep a long pause on demand revival. This is the place where good governance and capital efficiency followed with risk-adjusted process will be helpful to decide upon the portfolio.
One needs to avoid fantasy concepts in investments. Short term picks of making money will no longer be a feasible approach. Irrespective of stocks or Mutual Fund –long term approach of sustainable business growth linked portfolio construction is the ideal map. Every SAMVAT it is important to come up with a theme of doing investment and designing the portfolio. But the current trade war and dried liquidity lead to developing a universal theme to protect one’s portfolio.
Realistic opportunities identified through a simple investment theme will make a portfolio rich in the long term. Fantasy-based assumptions and projection-based approach will lead to a loss of portfolio only. Hence as a client, one needs to understand that a portfolio of investments should be realistic in projecting returns and growth.
We often ask for some unique stock or Mutual Fund scheme name which will fall after the 20th Item on the same list. In simple terms, I am asking to throw away the gems and look for some stone which will turn into Gem. Well stop searching the 21st item and just look on the 1st to 10th items you have the option to pick. A well balanced, risk-adjusted portfolio of investment can be constructed from proven gems. The SAMVAT 2076 is for changing this behavioural aspect of the investor.
The construction of the investment portfolio is more important compared to whether the nifty rises to 14000 or 20000 levels in SAMVAT 2076. Yes, the conclusion of the note is simple. Understanding the theme of investments and identification of the hidden opportunities from a sustainable point of view is going to be the key aspect for portfolio construction. Keep your investment portfolio simple; keep a close eye on your risk and behavioural aspect of investment. SAMVAT 2076 is the year to construct a wealth-creating portfolio for long term taking advantage of the rock bottom levels of the Indian macro factors.