Can rule-based multi-asset technique beat conventional fixed-income method?

NEW DELHI: Investors world large ought to brace for market volatility within the medium time period, given heightened geopolitical tensions and the potential for downward earnings revisions, based on Motilal Oswal Private Wealth.

According to the wealth supervisor, gold has generated 8% returns on a year-to-date foundation in rupee phrases, Alpha Strategist Advantage Portfolio (ASAP) 1% and Nifty 2%.

“The returns offered present the significance of asset allocation in a portfolio,” the wealth manager to corporates/institutions, high net worth, and ultra-high net worth individuals said in a report.

To beat the market volatility, Motilal Oswal Private Wealth Management has curated an investment proposition named ‘Alpha Strategist Advantage Portfolio’. It comprises equal weighted investment in different asset classes such as 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%) and cash (arbitrage funds, 20%).

“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,“ the wealth manager said.

According to Motilal Oswal Private Wealth, 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.

Ashish Shanker, managing director & chief executive officer, Motilal Oswal Private Wealth, said, “The Indian economy and 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.”

The ASAP portfolio from 1990 to 2022 grew at a compounded common progress price of 11.7% towards 9.9% progress in gold, 8.3% progress in debt and 13.8% and 13% progress in Indian and US equities, respectively.

The normal deviation of the ASAP was noticed to be at 8% towards a normal deviation of 27.4% in Indian equities, 15.1% in US equities, 2.6% in debt, 0.6% in money, and 14.8% in gold. The benchmark index of ASAP is Crisil Composite which is the usual benchmark of the fastened earnings funds.

Nitin Shanbhag, head – funding merchandise, Motilal Oswal Private Wealth, mentioned, “The ASAP is an all-weather technique and a superior various to fastened earnings funds. The rationale behind ASAP is to have a rule-based publicity throughout asset lessons to remove behavioural biases and generate regular constant returns over the long run.”

Catch all of the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint.
Download The Mint News App to get Daily Market Updates.

More
Less

Subscribe to Mint Newsletters

* Enter a sound electronic mail

* Thank you for subscribing to our e-newsletter.

First article