Indian market lazy portfolio redux
TLDR: With new options in the market, what would a lazy index portfolio would yield
Most retail investors chase after the top funds in each category as recommended by morning star, money control or value research online. <Insert your favourite comparison site here>. The problem with this approach is that this list doesn’t actually mean anything. Every year the top performing funds move up and down.
If you keep constantly churning your mutual fund list to only have the top 10 funds in every category on an annual basis you will end up with a bunch of average funds providing a below average return.
What are the options - equity ?
For the retail investor, I would recommend going with index funds.
They are fairly straight forward to understand
They are low cost compared to actively managed funds
No need to constantly switch
I had previously recommended these options on my blog posts
But given that there are new players in the market, it is time for a revision.
Equity portion - all direct plans or ETFs
UTI Nifty 50 index fund - 20%
Between these 3 funds, you will cover top 250 companies by market cap in India. S&P 500 which is the world’s most tracked index of the top companies in US and top 100 tech and tech allied companies in Nasdaq.
I wish there were more funds to cover the ASEAN market but nothing viable yet.
What are the options - Debt?
For the retail investor, I would recommend the following debt funds
For ultra short term parking of funds - less than 3 months - Go with overnight debt funds
For short term parking of funds - greater than 3 to less than 1 year - go with liquid funds
For long term parking of funds - greater than 1 year - Bharat bond FoF with varying maturity
What ratio?
For the ultra conservative investor - 30% Equity, 60% Debt, 10% commodities
For the conservative investor - 40% Equity, 50% debt and 10% commodities
For the regular investor - 55% Equity, 40% debt and 5% commodities
For the aggressive investor - 65% Equity, 30% Debt and 5% commodities
For the ultra aggressive investor - 75% Equity, 20% debt and 5% commodities
How was the performance ?
Since some of the index funds are relatively new, i will use the underlying index to showcase the performance.
Conclusion
All this recommendation is based my observations and goal planning. If you are unsure consultant with a fee only financial planner to review your plan. These are thumb rules and individual preferences vary widely. Align your investment plans to your goals and time horizons. You might need to create multiple plans based on specific goals.
Good luck and Happy Investing.
#MyFatFIRE
