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Can your portfolio ship 15-20% returns constantly?

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Raveendra Balivada

When Rahul Tewatia single-handedly defeated Kings XI Punjab in Sharjah, it was nothing wanting a Cinderella story for an underdog. An underdog who wasn’t in a position to join correctly in his first 15 balls, took Cottrell for five sixes in an over and snatched the victory from the very jaws of defeat. The impression of the innings was such that Michael Slater on the commentary was made to eat his phrases and he did so very excitedly, stating “from now onwards, I will never ever write off any team, any individual in this beautiful game”. I wished to jot down this text simply after the match however due to the very nature of the ‘one time’ incidents, I needed to maintain my horses.

But then it occurred once more final week. Just when Rajasthan Royals had been staring exhausting at fifth consecutive defeat, their knight (Tewatia) in ‘pink’ shining armor got here and blew the ‘very defeat’ away.

Coming to the primary matter, a boring one, however the essential one, can your portfolio do a Tewatia? Can your portfolio ship 15-20 per cent returns within the final 4-5 years of retirement or want?

Maybe, however probabilities of that occuring are very much less. The 1-year and 3-year rolling return evaluation of Nifty 50 exhibits that getting 15-20 per cent returns constantly is a bit tough. It may also occur that simply earlier than the time of legal responsibility, some extraordinary occasion happens such because the Asian foreign money disaster, the dot-com bubble burst, monetary disaster, or Covid-19. Your fairness portfolio worth at such instances could even see a drawdown of 20-30 per cent. So, what to do to keep away from such conditions?

Well, as they are saying, ‘don’t put all of your eggs in a single basket’. All one must do is handle the asset degree allocation. For instance, investing in a mixture of fairness, mounted earnings and gold not solely helps you take in the shock of drawdowns within the portfolio but in addition helps you in legal responsibility administration.

The evaluation exhibits that asset allocation administration proves worthier than investing in fairness alone. The 3-year rolling return evaluation exhibits that there have been few situations the place the portfolio has yielded unfavorable returns. So, the ethical of the story is — whereas in sports activities, Tewatia can pull off ‘unbelievable heists’ however relating to private monetary investing, the portfolio should replicate the traits of ‘Mr. Dependable (Rahul Dravid)’, regular but unyielding.


Raveendra Balivada is Head of Investment Advisers at HDFC Securities. Views are his personal)

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