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Wealth Creation MF Only | Model Portfolio

Wealth Creation Core MF | Model Portfolio (Methodology Document)

Published on 01 June 2021 .Views 8764 .Comments 68
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Introduction to Wealth Creation - Core MF Model Portfolio

With this Fund of Fund Model portfolio, we are trying to make complicated investing simple. The portfolio is based on the multi-asset and multi-cap allocation philosophy, a strategy that is used by institutional investors for diversifying risk to get optimum returns. The pillar of this portfolio is our mutual fund research product Fund-o-meter.

The idea is to utilize quantitative and qualitative factors observed based on our extensive research for suggesting funds across asset classes that make sense for individual investors like you. We have utilized our proprietary fund selection methodology for shortlisting and adding equity mutual funds and ETF/index funds in constructing this fund-of-fund model portfolio.
  • Mutual Funds – These 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.
  • Gold and international Funds (Mostly US-based) are less volatile in nature than Indian Equity, helping as a cushion by geographical diversification, and by investing in a commodity like Gold, we are diversifying our portfolio risk. These funds and asset classes are also very good hedges against the Indian Stock market and have a low correlation.
  • ETFs and Index funds are passive investment funds that are linked to an underlying benchmark index and provide a low-cost alternative for taking exposures in the financial market.
Core MF model portfolio could be an ideal investment solution for investors seeking long-term wealth generation with no fuss and passive involvement.

Investment Objective
The aim is to generate returns by creating a multi-asset, multi-cap, growth-oriented fund of fund portfolio with reduced downside risk.

Buy and Hold investments with a time horizon of 8+ years.

Rationale for this Portfolio
We all want returns from our investments but active investing needs both time for research and knowledge to make wise stock selection. So, here we are with this model portfolio that will help an investor meet their long-term goals with passive investments in funds of different asset classes. Investors can use this portfolio as their CORE Equity portfolio for meeting major life goals like Retirement, Children's Education, Marriage, and Emergency.

Given that the objective is wealth creation in the long term, we have not taken any Debt allocation in this goal. To give geographical diversification benefit, we have taken allocation to funds investing in international equity as well. Some exposure to Gold also provides asset-class diversification benefits.

We have included three modes of investment vehicles in this model portfolio – Large, Mid and small Cap Mutual Funds, Gold and International Mutual Funds. For meeting the investment objective of a growth-oriented multi-cap, multi-asset portfolio, looking at the long-term expected returns and risk levels of each asset class based on our long-term view of the Indian economy, Gold markets & Global financial markets, we suggest this strategic allocation of 80% in Indian Equity Mutual Funds, 10% in Gold and 10% in International Fund. 

Strategic Allocation by Asset Class
Is this model portfolio for you?

This Wealth Creation - Core MF portfolio is appropriate for an investor who are looking for a core portfolio constructed using different funds and the investors do not have the time to manage stocks portfolios. The risk appetite is from medium to high-risk tolerance and a time horizon longer than eight years. These investors are willing to accept periods of high market volatility in exchange for the possibility of receiving returns that outpace inflation by a significant margin. We also tried to reduce the downside risk by diversifying the portfolio with Gold and international Funds.

This portfolio might get an average annualized return of 12-15%. Its best yearly gain might be 20-25% and its biggest decline in a year may range from 15-20%.

Time Horizon – Minimum 8 years
Benchmark – BSE 500 TRI
Rebalancing – 6 Monthly

Important Dates

Launch Date – May 30th, 2020
Last Market Driven Rebalancing on –  June 1st, 2024
Last Bi-Annual Rebalancing on – December 15th, 2023
Next Bi-Annual Rebalancing on – June 15th, 2024

Portfolio Performance

Disclaimer: The information on this site is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell stocks or MF. All these portfolios are created based on our expert’s experience in the market. These Model Portfolios are prepared by SEBI Registered RIA

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