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

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

Published on 07 June 2023 .Views 5221 .Comments 15
Share On
Yadnya’s Model Portfolios - Gearing up for the Marathon named Long-term Investing

Many of our friends who are marathon runners say that ‘Marathon is an event where everyone is equal and ordinary at the starting line, but a legend is born at the finish line’. Isn’t that so true when it comes to our investing lives as well? The baby steps of investing every month’s savings and watching ourselves move closer to the finish line of achieving our financial goals require similar traits of a marathon runner. Focus on specific aims and goals, resilience to overcome hurdles of unprecedented emergencies, and market downfalls as well as the preparedness and motivation to stay on track no matter if the portfolio bleeds red due to unfortunate events like Covid, Russia-Ukraine War, inflation-led recession, and what not!

It has been more than 3 years since the launch of our risk profile-based model portfolios and what an enriching journey it has been. With our model portfolios, we aim and try to help investors run this marathon of long-term investing enabling them to achieve their financial goals through disciplined investing backed by deep research. Here is a glimpse of the performance of our model portfolios since the inception of the portfolios as well as during the last 1 year.

                                       (*Since the methodology of the Quanto-Funda Portfolio was changed in December 2022, the performance of that model portfolio isn’t considered as part of this                                                  analysis.)

In the last 1 year, most of the portfolios have outperformed Nifty50 TRI returns with the maximum performance shown by the Student and Early Earner portfolio with an annual return of nearly 21%, and the Value portfolio with a return of nearly 19%. All the stock-only portfolios except the SIP portfolio have beaten the benchmark in their annual returns, however, if we look at the since-inception performance of the SIP portfolio, it has also beaten the benchmark. NIFTY50 TRI has given a return of 15.63% since the inception of the SIP portfolio and the SIP portfolio has given an annualized return of 16.54%. As per expectation, the Student and Early Earner model portfolio has given the highest returns as it is a high-risk portfolio meant for young investors who have a higher risk appetite due to fewer obligations and the absence of financial goals related to kids and spouses. As the name suggests, the Value portfolio follows the principles of value investing where we look for companies that have strong business models and are available at very attractive valuations as compared to their peers from the same industry.

If we look at the since inception returns, the Value Portfolio has shown stellar performance with 34.19% CAGR in the last 3 years has proved that the methodology chosen for this portfolio is on track. The small and mid-cap model portfolio has also been a good wealth creator with an inception CAGR of 22.31%.

Performance of Risk Profile-based model portfolios: True to their name these are core model portfolios suited for different risk profiles including the presence of different asset classes, including equity, debt, and money market. The Growth Portfolio has marginally underperformed the NIFTY 50 TRI with an annual return of 9.63% in the last 1 year. However, looking at the returns since inception the portfolio has a CAGR of 18.19% and it has beaten NIFTY 50 TRI returns of 15.12%. An important thing to notice here is that NIFTY 50 is a 100% equity benchmark but the Growth portfolio includes 95% Equity and a 5% debt component. In fact, 1 Year Beta of the Growth portfolio is 0.75, which means if the index falls by 10% the growth portfolio with a Beta of 0.75 falls to a lesser extent by 7.5%. Incorporating risk parameters like Beta and standard deviation helps us build portfolios that are more resilient than the market in case of downfalls because we know that losing money is more painful than the delight obtained in gaining profits. These portfolios were started in December 2019, and they have already seen some extreme events of the COVID-19 Pandemic and recessions, the global rise of inflation-led interest rates, and Russia Ukraine war. Thanks to our philosophy of “always keeping risk in mind” while constructing these “Core Portfolios”, they have performed true to our expectations. The annual returns of all three portfolios Growth, Moderate and Conservative are 9.63%, 11.69%, and 13.09% while the long-term returns (since-inception) are more aligned with the respective risk profile expectations with 18.19% CAGR return from Growth, 13.32% from Moderate, and 13.78% from Conservative.

Performance of the Fund of Fund Model Portfolios:  The wealth creation portfolio has given an annual return of 17.40%. The since inception CAGR return of 25.26% is in line with the NIFTY 50 TRI return of 25.57% but the wealth creation model portfolio is 90% into equity with a very low Beta of 0.61. As they say, “The essence of investment management is the management of risks, not the management of returns”.

The regular income model portfolio owing to its characteristic of regular income has shown a good performance of 15.73% CAGR since its inception.

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. 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., prioritizing risk over reward but with a focus on the upside is going to remain our mantra!
private article suscription area icon

You like to know more. We like that!

Please subscribe Model Portfolio Plan to get access of all premium model portfolio articles Only at Rs. 11,999.00/Year.

Please login to view this free article.

This blog is available only for logged in users, please register and get access to view this article.

Recently Uploaded

premium Premium
free Free
Chat on WhatsApp
Caret UP Arrow
InvestYadnya Support
Typically replies in minutes
InvestYadnya Support
Hi there
Welcome to InvestYadnya.
We are available to assist you on WhatsApp.
Please click on the button below to chat with us.
(10 AM to 7 PM IST)
Chat with InvestYadnya