Icon times
Regular Income Model Portfolio | Model Portfolio in India

Regular Income Model Portfolio | Model Portfolio in India (Methodology Document)

Published on 01 June 2021 Views 4023 Comments 5

Introduction to Model Portfolios

 

With Yadnya’s Model portfolios, what we are offering is making complicated investing simple.

These Model Portfolios use same asset allocation philosophy that we use for some of the big investors and its pillars are our research-

based products –

o Mutual Fund Subscription

o Financial planning product

The idea is to utilize quantitative and qualitative factors observed based on our extensive research for suggesting model portfolios that make sense for individual investors like you.


Fund Selection Approach

 

Mutual Funds help in easy diversification and tapping on professional fund management and research expertise via an easily accessible channel. It is truly an invest and forget type of product unless and until there is a significant change in management or a market event-based trigger.

 

 

Debt Funds are much safer & less volatile than Equity. Arbitrage Funds are a good substitute of Liquid funds for investors in 30% tax bracket as they are tax efficient option for short term investing. Hybrid Funds reduce our overall downside risk during bear market and are a good option for conservative investors.

 

ETFs and Index funds are passive investing funds that are linked to an underlying benchmark index and provide a low-cost alternative for taking exposures in the financial market.

 

We have utilized our proprietary fund selection methodology - MFYadnya.In for shortlisting and adding equity, hybrid & Debt mutual funds and ETF/index funds in model portfolios.

o

rereIncome Pokyiyrtfolio

 Regular Income Portfolio:

Investment Objective

The aim is to generate long term regular income with the current corpus with tax efficient & above inflation returns

 

 Strategy

Strategy is to invest in Debt for short term income and gradually take some Equity and other market driven allocation for medium & long-term income

 
Rational for this Portfolio

 

You’ve saved for retirement for years. Now that retirement is approaching, how can you create a regular stream of income from your savings to help pay your bills?

Or you have inherited a large sum of money and want to invest in such a way so that you can get regular income for long term. Investors do not want to take much risk with these investments and look for regular income for as long as possible. Primary objective is to get tax efficient returns and some higher than inflation returns to avoid the loss of capital.

We have assumed that you already have a separate Emergency Corpus apart from this investment and would withdraw an optimum

inflation adjusted monthly income so that your investment corpus can sustain for long term. Example: An approx. Rs. 50 Lakhs corpus can give you 7% inflation adjusted Rs 21k/month income (increasing 21k income by 7% every year) for 20 years with this portfolio.

We have included multiple modes of investment vehicles in this model portfolio – Fixed Deposits/Liquid Funds/Arbitrage Funds, Debt Funds, Hybrid Funds, Large Cap Funds and Gold Funds. For meeting the investment objective of regular income with tax efficient & above average inflation returns with multi-asset portfolio, looking at their long-term expected returns and risk levels of each asset class based on our long-term view of Indian economy, we suggest the strategic allocation of 50% in Liquid/Debt, 45% in Equity & 5% in Gold.

Methodology
Regular Income Model Portfolio

 

 Strategic Allocation by Asset Class

 

 

 Is this Model Portfolio for you?

This long term Regular Income with Growth portfolio is appropriate for a moderate risk investor who wants a long-term regular income. It is assumed that the investors have a separate Emergency Fund apart from the investment in this portfolio. They are wary of capital loss but are willing to accept periods of some market volatility in exchange for the possibility of receiving returns that outpace. We also tried to reduce the risk by hedging the portfolio with some Gold investment.

This portfolio might get an average annualized return of 8-9%. Its best yearly gain might be 12-15% and its biggest decline in a year may range from -0 to -5%.

 

Time Horizon – Min. 10 years Benchmark – Crisil Hybrid 35+65 Rebalancing – 6 Monthly

 
Important Dates

 

Launch Date – May 30th, 2020
Last reviewed – June 12
th, 2021

Next Rebalancing on – Dec 15th, 2021

Performance
 

This chart shows the portfolio’s cumulative performance starting from Jan 2016 until 30th Sept 2021. The Model Portfolio is compared against Crisil Hybird 35-65 Aggressive cumulative returns & Nifty 50 TRI Index.


Regular Income Model Portfolio Cumulative Performance