How to Build a high Growth Stock & Mutual Fund Portfolio?

5 min read
How to Build Growth Portfolio? Who Should Refer to Growth Portfolio? Yadnya's Growth Model Portfolio will help you in constructing an aggressive growth-oriented portfolio to meet long-term investment goals. A Growth Portfolio is an aggressive portfolio, which is appropriate for an investor with a high-risk tolerance and a time horizon more than 8 years.

Yadnya’s Growth Model Portfolio

Introduction

How to Build Growth Portfolio? Yadnya’s Growth Model Portfolio will help you in constructing an aggressive growth-oriented portfolio to meet long-term investment goals. A Growth Portfolio is an aggressive portfolio, which is appropriate for an investor with a high-risk tolerance and a time horizon more than 8 years.

Model Portfolios by Invest Yadnya
Model Portfolios by Invest Yadnya

How to Build Growth Portfolio?

Model Portfolios – An Overview

  • Model portfolios can be an important tool in the journey to meet long-term investment goals. These Ready-made portfolios are group of assets with pre-defined weights to provide an expected return proportional to risk taken.
  • These model portfolios are created considering the different requirements of investors based on their risk profile. So, they can accordingly help investors in making broad asset class allocation decisions.
  • How do you decide what percentage of your investments to be done in equities, what percentage in debt and how much in liquid funds?
  • An investor’s risk tolerance, investment horizon and the financials goals are the key drivers in a strategic asset allocation approach. Model portfolios are simple and effective tools to get access to institutional investing level research and investment strategies.
  • In short, Model portfolios are comprehensive, ready-to-implement investment guide which offer :
    1. Expertise and Knowledge about the Asset allocation, Stock and Fund selection etc
    2. Diversification across different asset classes like Direct Stocks, Equity Mutual Funds and Debt Funds
    3. Flexibility to the investment strategy to be implemented according to different risk profiles
Model Portfolios - 3 Types According to Risk Profiles
Model Portfolios – 3 Strategies According to Risk Profiles

Who Should Refer to Growth Portfolio?

  • As an investor, one should look for investments that give you returns proportional to the risk you take. Model portfolios is an important tool in the journey to meet long-term investment goals, but one size rarely fits all.
  • Yadnya’s Model Portfolios offer three strategies with Conservative, moderate and growth-oriented approaches to suit many types of risk profiles.
  • Growth portfolio’s aim is to promote growth by taking greater risks, including investing in growing industries.
    • Portfolios focused on growth investments typically offer both higher potential rewards and concurrent higher potential risk.
    • Growth investing often involves investments in younger companies that have more potential for growth as compared to larger, well-established firms.
  • A Growth Portfolio is an aggressive model portfolio, which is appropriate for an investor with a high-risk tolerance and a time horizon more than 8 years.
  • Aggressive investors are willing to accept the extreme market volatility for higher returns that beat inflation by a wide margin.
  • This portfolio will have a high allocation to stocks and equity mutual funds. So, an aggressive investors need to have a time horizon more than 8-10 years. For a severe downturn in the market, you will need a sufficient time to compensate for the value declined.
  • Aggressive portfolios are best suited for investors in their 20s, 30s or 40s. These are typical investor profiles who can refer to this portfolio :
    1. A moderate to high-risk taker 20-30 Year old investor with low liabilities and high savings rate
    2. A high-risk taker 35-50 year old investor with dependents, above average savings rate with a stable & well growing job
    3. A very high-risk taker above 50 year old investor who has no liabilities and addressed all financial goals

Yadnya’s Growth Model Portfolio

Strategic Asset Allocation
Growth Model Portfolio – Strategic Asset Allocation
How to Build Growth Portfolio?
  • The key investment objective of Growth Model Portfolio is to generate higher long-term returns by investing in aggressive growth-oriented strategy.
  • We have included three modes of investment vehicles in this model portfolio :
    1. Direct Stocks
    2. Equity Mutual Funds
    3. Fixed Income/ Debt assets (Debt Funds)
  • For meeting the investment objective of an aggressive portfolio, looking at the long-term expected returns and risk levels of each asset class based on our long-term view of Indian economy and financial market, we recommended a strategic allocation of :
    • 62.5 % in Direct Stocks
    • 35% in Mutual Funds
    • 2.5% in Debt Funds
Mutual Funds Allocation (Equity Funds + Debt Funds)
Growth Model Portfolio – Mutual Fund Allocation
Yadnya’s Growth Model Portfolio – Mutual Fund Allocation
  • Equity Mutual Funds
    • Mutual Funds help in easy diversification and tapping on professional fund management and research expertise via an easily accessible channel.
    • It is truly an invest and forget type of product unless and until there is a significant change in management or a market event-based trigger.
    • Taking into consideration the long-term investment horizon of mote than 8 years, we have constructed a well- diversified basket of Large & Midcap Funds and Multicap Funds with highest weightage 11.375% for each category.
    • While considering the aggressive growth-oriented strategy, we have allocated a weightage of 6.125% each for Small Cap funds and Mid Cap Funds.
    • Thus, the Total Equity Mutual Funds allocation is 35%.
  • Debt Funds
    • Being less volatile in nature, Debt funds help as a cushion from asset allocation perspective.
    • Also, by investing in a different asset class, we are diversifying our portfolio risk.
    • However, given the growth objective, the allocation to debt funds kept low (2.5%).
  • So, the Total Allocation for Mutual funds (Equity Funds + Debt Funds) is kept at 37.5%.
Direct Stocks – Sectoral Allocation
Growth Model Portfolio – Stocks Sectoral Allocation
Yadnya’s Growth Model Portfolio – Stocks Sectoral Allocation
  • As far as direct stocks are concerned, we have mainly focused on Consumption Theme while selecting stocks and allocating sector weightages.
  • While constructing the portfolio, the core theme was investing in companies that are into consumer centric businesses that grow with consumption and businesses that are into financing this retail consumption.
  • India is a consumption driven economy, which include sectors such as – Banking & Finance, FMCG, Consumer Durables, Consumer Non Durables, Automobiles, Petroleum & Gas, Telecom, Healthcare, Retail, Travel & Tourism, Real Estate etc.
  • The above table shows the detailed sectoral allocation in our Growth Model Portfolio.

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