Yadnya’s Growth Model Portfolio
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.
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 :
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 :
- A moderate to high-risk taker 20-30 Year old investor with low liabilities and high savings rate
- A high-risk taker 35-50 year old investor with dependents, above average savings rate with a stable & well growing job
- 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
- 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 :
- Direct Stocks
- Equity Mutual Funds
- 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)
- 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
- 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.