Kolkata, 23August2022: According to MotilalOswalPrivate Wealth (MOPW),Gold has generated 8% returns (YTD) in INR terms, ASAP 1% and Nifty 2%. Equity is likely to catch up with gold as global central banks slowdown the pace of rate hikes in the remaining part of the year. The returns provided shows the importance of asset allocation in a portfolio.
As per MOPW, investors globally can expect market volatility in the medium term given the heightened geopolitical tensions and the potential for downward earnings revisions. Investors should avoid big changes to asset allocations that differ from long-term risk-based targets. Given the external risks and their potential impact, investing in a staggered manner may help iron out market extremes.
AshishShanker, MD & CEO, MotilalOswal Private Wealth said, “The Indian economy & markets are at an inflexion point. A confluence of factors will lead to sustainable growth this decade from Indian equities. The number of UHNW individuals is expected to grow from 6,884 in 2020 to 11,198 by 2025.
Alpha Strategist Advantage Portfolio (ASAP)
As global central banks unwind their easy monetary policy, markets worldwide are expected to witness high volatility. To beat the market volatility, MotilalOswal Private Wealth Management has curated an investment proposition named ‘Alpha Strategist Advantage Portfolio’. It comprises of equal weighted investment in different asset classes like –
- Indian Equities (investing only in the passive index funds) (20%)
- US Equities (investing only in S&P 500 index funds) (20%)
- Gold (Gold fund) (20%)
- Debt (Target Maturity Funds) (20%)
- Cash (Arbitrage funds) (20%)
The advantage of having an equal-weighted portfolio is having a rule-based strategy across asset classes. Equities are hedged against Gold Funds and Arbitrage funds that provide cushion against any major fall. While on the upside, the fund enjoys higher returns from Indian and US equities.
The ASAP portfolio from 1990 to 2022 grew at a compounded average growth rate of 11.7% against 9.9% growth of Gold, 8.3% growth of Debt and 13.8% and 13% growth of Indian and US Equities respectively.
- The standard deviation of the ASAP was observed to be at 8% against a standard deviation of 27.4% in Indian Equities, 15.1% in US Equities, 2.6% in Debt, 0.6% in Cash, and 14.8% in Gold. The benchmark index of ASAP is Crisil Composite which is the standard benchmark of the Fixed Income funds.
- The ASAP on absolute terms for the period ended 31st July 2022, has given 3.1% returns against 1.7% returns of the Crisil Composite Index.
The ASAP portfolio is rebalanced annually at the end of the calendar year in such a way that all asset classes have an equal weightage at the beginning of the corresponding next year. Profits from the top performing asset classes are distributed in the non-performing asset class.
Mr. NitinShanbhag, Head – Investment Products, MotilalOswal Private Wealth said, “The ASAP is an all-weather strategy and a superior alternative to fixed income funds. The rationale behind ASAP is to have a rule-based exposure across asset classes to take away behavioural biases and generate steady consistent returns over the long term.”