Asset allocation: The key to winning your financial worldcup
Posted on: December 30, 2019 | By: Anirudh Gupta
What is your world cup in life? Financially what is your goal?
To achieve any worthwhile goal, a team is needed as in cricket. Similarly different asset classes like different category of players help build the momentum.
Let us explore the different types
Batsmen
These are your equity holdings. It is also bifurcated in multicap,large cap, large and mid cap,mid & small cap as there are openers,1 down,2down,3 down in the game.
The game depends on the pitch. Similarly it is about a certain specialty which dominates certain conditions. Basis valuations and earnings likely outperformers can be chosen.
1. Bowlers
These are the debt portion in your portfolio. They are very consistent; however they also come in different modes like a fast bowler, spinner and multiple variations thereof.
They generally do not beat inflation as an asset class. However they form the safety part of the portfolio. Liquid and ultra short term is the recommended ones in our list. Liquid has been one of the outperformers for the last one year.
2. All rounders
Balanced Funds/Hybrid funds are the all-rounders in the portfolio. The key is to develop a mix of them. It ensures stability in the portfolio. Idea is to make a difference between the aggressive and the conservative.
For investors largely with a debt experience conservative balanced funds are better.
3. Fielders
Catches win matches. Fielders in the context of investing are the alternate fund categories. As per a sebi definition what is not mainstream is alternate. They are different categories in alternate space as well.
The more tested categories have been the
1. Real estate funds:
Residential focused funds are likely to do better in the affordable housing space on account of policy support.
2. Hedge Funds
These funds work in all environments. They can take a position on either side of the market situation. A good thing to have in the portfolio if one is in maintaining wealth mode.
The ideal team like the ideal portfolio depends on a mix of weather conditions, the pitch and the preparation done before the game. Seize the Day!
Categories
Related Post
Certified Credit Research Analyst (CCRA™)
The Game of Investing: Lessons from English Premier League and Fantasy Premier League
The Explosive Growth of WealthTech: Revolutionizing Personal Finance
De-dollarization – The Global Movement towards Monetary Independence
The Role of IBC in Mergers & Acquisitions (M&A) – An Analysis of the legal framework in India
Analysing Recent Amendments to Section 56(2)(viib) of the Income Tax Act: Exemption Notification and Proposed Changes to Rule 11UA
Private credit or debt – an evolving asset class in India
