Yadnya’s Model Portfolios Performance - Gearing up for the Marathon named Long-term Investing

Yadnya’s Model Portfolios - Gearing up for the Marathon named Long-term Investing

Many marathon runners often say, ‘A marathon is an event where everyone starts as equals, but legends are made at the finish line.’ This sentiment holds true for investing as well. The journey begins with small, consistent steps—investing month after month, staying focused on financial goals, and demonstrating resilience through market fluctuations. Just like a marathon runner overcomes physical and mental barriers, investors must navigate market uncertainties, economic downturns, and global events like the COVID-19 pandemic, the Russia-Ukraine war, and inflation-driven recessions. Success lies in perseverance, preparation, and staying the course despite challenges.

It has been over five years since we introduced our risk profile-based model portfolios, and the journey has been truly rewarding. Our goal has always been to assist investors in this marathon of long-term wealth creation by fostering disciplined investing grounded in rigorous research. As we reflect on this journey, here is a snapshot of how our model portfolios have performed since their inception and over the past year.

^{(**The Quanto-Funda model portfolio strategy was changed in December 2022. In the earlier methodology, we calculated sector-wise scores and picked the top performers in a respective sector based on the performance of stocks on various fundamental and quantitative parameters. In the new methodology, we have shifted to a more momentum-oriented strategy.)}

The recent market correction has influenced portfolio performance across various investment strategies. While short-term volatility has presented challenges, long-term CAGR figures remain robust, reaffirming our disciplined approach to asset allocation and risk management. Growth-oriented portfolios with higher exposure to mid and small-cap stocks have experienced some temporary setbacks, whereas diversified and conservative portfolios have continued to demonstrate resilience.

Despite these fluctuations, our focus remains on long-term fundamentals, disciplined asset allocation, and maintaining a strategic approach to investing.

Over the past year, the Moderate Portfolio has been the best performer, with an annual return of 10.96%. Following closely, the Conservative portfolio has generated a 10.08% return over the past year. In comparison, the NIFTY 50 TRI provided a return of 9.01%, while the S&P BSE 500 TRI delivered a 4.52% return from April 30, 2024, to April 30, 2025.

Performance of Risk Profile-based model portfolios: Our core model portfolios, designed for various risk profiles, incorporate a balanced mix of equity and debt. Notably, Moderate and Conservative portfolios have outperformed the broader market benchmark (i.e., the S&P BSE 500 TRI), while the Growth portfolio has marginally underperformed. Despite this, all three portfolios maintain a lower beta, ensuring better downside protection.

The Growth Portfolio, with a Beta of 0.68, is designed to mitigate market volatility, resulting in a more measured decline compared to broader indices. These portfolios have successfully navigated extreme market events, including the COVID-19 pandemic, inflation-led interest rate hikes, and geopolitical uncertainties. Their consistent performance underscores our philosophy of prioritising risk management. The annual returns of the Growth, Moderate, and Conservative portfolios are 4.69%, 10.56%, and 10.08%, respectively, while long-term (since inception) CAGR returns align with their respective risk expectations at 16.76%, 14.86%, and 14.49%.

Performance of the Value Portfolio: True to its investment philosophy, the Value Portfolio focuses on fundamentally strong businesses available at attractive valuations. This disciplined approach has yielded impressive results, with a since-inception CAGR of 28.84% since March 2020, reaffirming the effectiveness of our methodology in identifying high-quality opportunities.

Performance of the Quant-Based Portfolio: The Quanto-Funda Portfolio, designed for high-risk investors, has faced some short-term headwinds due to its higher sensitivity to market movements (Beta of 1.00). While this has led to near-term volatility, its dynamic stock selection strategy positions it well for potential strong performance in more favourable market conditions. Over time, this approach aims to capitalise on high-growth opportunities, maintaining a balance between risk and reward.

Performance of Fund of Fund Model Portfolios: Our Wealth Creation Portfolio has delivered an annual return of 7.62%, with an impressive since-inception CAGR of 22.58%, surpassing the NIFTY 50 TRI return of 22.21%, despite having only 90% equity allocation and a low Beta of 0.48. This highlights the effectiveness of our risk-conscious investment strategy. As famously stated, "The essence of investment management is the management of risks, not the management of returns."

The Regular Income Model Portfolio continues to provide consistent performance, delivering a strong since-inception CAGR of 15.27%. Similarly, the All Seasons ETF Model Portfolio has yielded 6.14% returns in the past year and a solid 15.87% CAGR since its inception, reinforcing its stability across market cycles.

Performance of Our Newest Portfolio: Launched on September 20, 2023, the Happy Earth Portfolio is designed with a long-term sustainable investment vision. While it has encountered short-term volatility, registering a return of -11.91%, we remain confident in its long-term potential. Market cycles present both challenges and opportunities, and we continue to monitor and optimise the portfolio to align with its sustainability-driven objectives.

While short-term market movements can create fluctuations in returns, our disciplined investment framework and strategic asset allocation continue to deliver strong long-term performance. By focusing on fundamentals, risk-adjusted returns, and a well-diversified approach, our portfolios remain well-positioned to navigate market cycles and create sustainable wealth for investors.

For the whole team of Yadnya, it is very satisfying to see that the investment objectives and goals for which the respective model portfolios have been created are being met following a strict regimen of the risk management framework. Legendary investor Charlie Munger famously said that risk to him isn’t just stock volatility; risk to him is the risk of permanent loss of capital as well as the risk of inadequate returns. Taking bigger risks for big gains seems fancy, but the fanfare stops when big risks lead to big losses. For us, managing the downside risk, i.e., prioritising risk over reward but with a focus on the upside, is going to remain our mantra!