My actual portfolio is published here. All changes that I make will also be listed here.
This portfolio update is a long overdue one. A lot of water has flown under the bridge. Understatement!
We are currently facing a once in a 100 years world crisis (COVID19) and a once in a decade stock market rout. Most of us cannot fathom that. We were not there 100 years ago and a decade ago, we were hardly a participant to notice.
But this time is different. If you have been reading through my blog notes, you would know my thought process on the current market situation.
Anyways, we are here to talk about my portfolio.
Here’s my portfolio as on March 31, 2020.
Like yours, it fell and fell and….
Equity suffered. Interestingly, my debt fund – Franklin India Ultra Short Bond Fund – also suffered a 4% drop in NAV this January. So, this made up a bit for the allocations. I am not making any big re allocations for now except for a small change as mentioned below.
FYI, I had moved quite a bit towards equity stating August 2019, so the leeway for now is not much. If markets go down more than 25% from here, I might increase my desired allocation to equity from 70% now to 80% or more.
A new addition to the fixed income allocation is an alternative investment option in the peer 2 peer space. A category I otherwise consider dangerous, this particular offering made quite a bit of sense. Conservatively managed and modest post tax returns. The best part – the liquidity is as good as a debt fund.
This was initially a part of the cash allocation and a smaller one. Now, I moved it to the larger fixed income allocation and also switched some of the Franklin Fund along with fresh money to allocate here.
For the rest of my thoughts, just keep reading below specially the Investment Assessment Scenario after the Oct 2019 portfolio update.
I think I wrote it a few months in advance. 🙂
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Portfolio as of Oct 2019
I am publishing the portfolio update after 2 months. I think doing monthly updates does not make any sense. Over time, this should be done quarterly.
Sept / Oct 2019 pushed the actual allocations upwards for equity, thus creating a gap with fixed income.
Here’s my current investment portfolio as on Oct 31, 2019.
Equity – ~70%
The equity allocation in the portfolio is now at 73% a tad over the desired allocation. It continues with its aggressive positioning with over 50% in mid and small cap (combined in all the 3 equity funds).
All 3 funds in the portfolio find their place because of the unique strategies. Parag Parikh Long Term Equity Fund with its highly diversified approach brings in international exposure too into the portfolio.
Fixed Income – ~25%
The allocation to fixed income has dropped, thanks to the rise in equity. The allocation is outside of the tolerance zone of +-10%. I will correct this allocation in November.
Cash – ~5%
The cash portion is aligned to the desired 5%. Currently, this is parked in a combination of bank deposits, alternative liquid investments.
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Investment scenario assessment
In recent memory, 2018 was a year which brought back sanity to otherwise heady times. Markets corrected quite a bit (and continue to in some cases), investors went into a tizzy and portfolios bled. Yet, it is not a capitulation. Hardly anyone is throwing their towels in.
Update Sept/Oct 2019: The bad news on the economy continues to flow in and yet Sensex touched its all time high of 40k. How does one reconcile this?
Well, my only takeaway is, markets can be crazy, sometimes highly optimistic and at other times pessimistic.
We have to understand those behaviours and act to our advantage.
I may not be a fan of putting big money in one shot now but ongoing allocation is definitely the way to go.
The long term opportunity continues to exist.
How do I see this as an investor? A Q&A with myself.
Is it the best time to invest?
It is a good great time to invest. We have come a long way compared to the first half of the year. There is opportunity.
Is it the time to be aggressive and go all in?
Not really aggressive, I would say. “Be fearful when others are greedy and greedy when others are fearful.”
That’s happening. Keep allocating on a regular basis.
Am I timing the market?
No. While numbers such as P/E, P/B ratios or interest rates and yields convey a particular state of the market, I am going beyond these to look at current investor psychology.
I am starting to see fear – a good signal.
Can I be wrong?
You bet! The market has its own mind. Having said that, I am comfortable with what is there and ready to add to the portfolio.
I will be happier if markets go down further and I can add more.
In Jan 2019, I wrote – “If it decides to take a leap, I will end up looking like a fool. But if it goes the other side, I will be celebrating. However, survival first.”
Looks like it is paying off.
My Investment Portfolio
With the broad strategy and asset allocation in place, I deploy the money into specific investments. For now, all my investments are in mutual funds.
Given my assessment of the investment scenario today, I am invested over 60% in equity and the rest in fixed income / liquid cash.
I am going to gradually increase exposure to equity to align with my target asset allocation.
The portfolio remains simple.
- No more than half a dozen holdings of funds.
- Each of the funds has to come in with a unique strategy and add value to the portfolio.
- Every holding has to have an allocation where it can make a significant difference to the portfolio.
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OLDER PORTFOLIO UPDATES
Investment portfolio as on Aug 31, 2019.
Equity – ~70%
The equity allocation in the portfolio is now at 70% in line with the desired allocation. It continues with its aggressive positioning with over 50% in dedicated mid and small cap funds (combined in all the 3 equity funds).
All 3 funds in the portfolio find their place because of the unique strategies. Parag Parikh Long Term Equity Fund with its highly diversified approach brings in international exposure too into the portfolio.
Fixed Income – ~25%
The allocation to fixed income hasn’t changed much and is in line with what we expect.
Just one fund for now.
Cash – ~5%
The cash portion too hasn’t aligned to the desired 5%. Currently, this is parked in a combination of bank deposits, alternative liquid investments.
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Investment portfolio as on July 31, 2019.
Some notes on the overall asset allocation. The asset allocation has changed significantly over the last few months.
Equity – ~65%
Aggressively positioned with over 50% in dedicated mid and small cap funds. All 3 funds in the portfolio find their place because of the unique strategies. Parag Parikh Long Term Equity Fund with its highly diversified approach brings in international exposure too into the portfolio.
The desired allocation is up to 70% now.
Fixed Income – ~25%
The allocation to fixed income has reduced now.
First the fund option gives more flexibility to pull out money, if required, for rebalancing. It has better tax treatment as well, when held for more than 3 years.
Franklin Ultra Short Bond Fund is not a conservative fund. Even though the interest rate risk is minimal, it takes on some credit risk to generate higher returns. Its portfolio make a slight shift towards safety since the SEBI rules now put a cap on structured investments in the portfolio.
Cash – ~10%
While the desired allocation is now down to 5%, the actual cash is still at 10%. Currently, this is parked in a combination of bank deposits, alternative liquid investments.
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Investment portfolio as on June 30, 2019.
Some notes on the overall asset allocation:
Equity – ~60%
Aggressively positioned with ~50% in dedicated small and midcap funds. All 3 funds have unique strategies. Parag Parikh Long Term Equity Fund with its highly diversified approach brings in international exposure too into the portfolio.
Fixed Income – ~30%
First the fund option gives more flexibility to pull out money, if required, for rebalancing. It has better tax treatment as well, when held for more than 3 years.
Franklin Ultra Short Bond Fund is not a conservative fund. Even though the interest rate risk is minimal, it takes on some credit risk to generate higher returns.
Cash – ~10%
Currently, parked in short term deposits, alternative liquid investments. This can be deployed into the relevant investments.
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The tolerance for deviation in the allocation is +/- 10%. The current allocations are within the tolerance zone.
Here’s my investment portfolio as on April 30, 2019.
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For reference, below are the original allocations I started with.
To go the main My Portfolio page, click here
To read the portfolio commentary, click here.
