- Welcome to Quantum Mutual Fund
- Are you an:
Posted On Monday, Nov 23, 2020
Asset allocation simply means dividing up your assets in the right proportions among equities, debt, bonds, and gold to maximize your chance of achieving your financial goals while also trying to control investment risk.
Investors are always looking for the “Best Mutual Fund” to invest in. There is no one best mutual fund, which shall have all traits suiting to achieve all the financial goals. What works for you may not work for other investors. The proportion that you choose to allocate to each of these assets is what determines your success as an investor.
It might be a good idea to relook at your investment portfolio based on your risk appetite and ask yourself these questions to help decide your asset allocation strategy.
Investing in just one asset class could hamper your financial goals.
As you see in the Venn chart above, it is suggested to have a safe money in the form of liquid assets such as Liquid Mutual Funds at the heart of your portfolio. This liquid fund helps to to meet short term cash and contingency needs and at the same time may help earn higher returns than those offered by savings bank accounts. You can then have equity and commodities like Gold in your portfolio. The advantage of diversifying your investments is to reduce dependency on a single asset class to generate risk adjusted returns. This introduces other dimensions of the market that are imperfectly correlated and are expected to respond differently to the ever-evolving economic situation. A well-diversified portfolio can help mitigate downside risk of your investments while growing it.
All asset classes generally don’t move at the same pace or in the same direction and that’s why having the right mix is important.
The chart below shows how asset classes react to different market cycles.
*YTD as of October 2020
The chart ranks the best to worst performing indexes per calendar year from top to bottom. Past performance may or may not be sustained in future.
Indices Used: S&P BSE Sensex Total Return Index; MCX Gold Commodity Index and CRISIL Composite Bond Fund Index
Past performance may or may not sustained in future
There have been years when equity markets had a dream run. Debt have seen times when they were touted as the most dependable of assets. At times it’s Gold that has shined the brightest. When equities are witnessing a correction, the presence of other asset classes in your portfolio could help you garner net positive returns. The chart shows how imperative it is to have Gold as a part of your portfolio to diversify risk.
The key for building a successful investment portfolio is to focus on the risk you can control (inflation) and reduce the risk you can’t (market risk). See the infographic below, our focus is on things that we don’t control (Market Risk, Time, Emotions) while we rarely focus on factors we can control (Inflation, Investment Tenure, Actions).
KNOW WHAT YOU CAN CONTROL
Even in the most conservative investment portfolio, it is advisable to allocate a portion of assets to equities to diversify your portfolio from inflation risks.
The first step in determining your asset mix in relation to your investment goal is to think whether your portfolio can fulfil your goals. Consider your investment horizon carefully during this exercise.
The old thumb rule of subtracting your age from 100 works fine in most cases. See infographic below:
PORTFOLIO ALLOCATION BASED ON YOUR AGE
The above chart is for illustrative purpose only
The Year 2020 has been ground-breaking for Gold and ESG funds globally.
Take advantage of emerging investment trends to enable your portfolio to capture maximum benefits from the market cycles.
The important thing to remember is that building that well-diversified portfolio with the right balance of assets is not a one-off exercise. Remember to perform periodic rebalancing to realign your portfolio.
The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.
Please visit – www.QuantumAMC.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.
Take small steps to achieve big dreams! Start your investment journey today!