Are Your Expectations Realistic?

Posted On Saturday, Aug 29, 2020

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We pick our investments for a good reason. But sometimes pandemics occur. Markets crash. Life happens. And we start to react emotionally. Even the best of investments sometimes make you question your well-reasoned decision. Inevitably, we ask ourselves, "Am I getting a good enough return on my investment?" Your financial goals may remain the same, but it's easy to get distracted. On this long journey towards wealth creation you may lose focus and start seeking fast short-term gains just to catch up with someone you know or heard of. Today we want to address this question and hopefully put your mind at ease.


Consider the role of your Investment manager

Let's first understand the responsibilities of your Investment manager.

You chose to invest in a fund typically based on your risk profile and your financial goals.

Your asset manager's goal is to help you achieve your financial goals. His focus is to help you mitigate risk, and protect your investments while offering risk-adjusted returns.


The Fund Manager follows his schemes investment objectives. He doesn't go about chasing the next fad just to make a quick returns.

As a result, his scheme may outperform and underperform the markets from time to time.

As investors, your goal should be to understand that excessive outperformance may not last.

Ditto for the underperformance.

It all depends on market movements. As long as your long term trajectory is fine, you should be content.


Being realistic with your expectations

An unrealistic return expectation is one of the most common problems that with investors.

To generate wealth, one needs to start investing early, ideally with a time frame of 7-10 years. The longer the tenure the better.

Once you start your journey, stay invested for as long as possible to reap the returns you signed up for.

Use SIPs to invest small amounts regularly in equity mutual funds. Use Systematic transfer plans or STPs for lump sum investments in times when your Investment manager sees a good opportunity.

A great advantage of using SIPs to invest is that you don't need to time the markets or decide each month on which equities to pick.

Remember to maintain an emergency fund and divert any surpluses to new SIPs or STPs where possible.


Prioritize safety and liquidity over returns

In one of our recent newsletters Pankaj Pathak, our Fixed Income Fund Manager, spoke about prioritising safety and liquidity over returns in investments.

With our Quantum Liquid Fund and Quantum Dynamic Bond Fund for example, Pankaj has not taken exposure in private sector corporations and invest only in government securities, treasury bills and highest quality instruments issued by Public Sector Undertakings (PSU).

If you were invested in such schemes, they will not deliver you the highest return. But yes, his safety first approach to investing, will deliver you good risk-adjusted returns.

If your expectations were different, you may have become disappointed. But if you are a safety first investor, then this is just what you are looking for.


What should be the right expectation?

Your expectations should be a function of your personal circumstances and your near term and future goals. One over-arching factor in this process is your appetite for risk.

This combination is unique to you.

The moment you get a grip on this, you will...

...stop chasing the highest return and start focusing on your goals

...you will evaluate the performance of the portfolio in the context of your goals

...you will probably have a far better chance of hitting your near and long term goals, without all the anxiety

Agree? Here are the next steps...


The first step is to be clear on your investment objectives and goals. This helps to set the right return expectations.

Prudent asset allocation is one of the hallmarks of wealth creation.

Carefully build a mixed bag of assets that can help balance and grow your wealth during any market situation. We suggest allocating 10-15% of your portfolio to Gold.


You can easily determine your asset allocation using this tool.

Editor's Note: Want to know more about the right approach to asset allocation? You can write to us at [email protected] Or give us a missed call at +91-22-68293807 and we will call you back.


Product Labeling

Name of the Scheme & Primary BenchmarkThis product is suitable for investors who are seeking*Risk-o-meter of Scheme
Quantum Gold Savings Fund

An Open Ended Fund of Fund Scheme Investing in Quantum Gold Fund
• Long term returns

•Investments in units of Quantum Gold Fund - Exchange Traded Fund whose underlying investments are in physical gold.
Quantum Gold Savings Fund
Investors understand that their principal will be at Moderately High Risk

*Investors should consult their financial advisors if in doubt about whether the product is suitable for them.



Disclaimer, Statutory Details & Risk Factors:


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 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 this article 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. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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