One of the fall-outs from these election results is a likely dose of populist measures, which in a way is a welcome development, says Sorbh. For several years, Government’s focus has been entirely on the supply side with its investment promoting policies. This is now likely to be balanced out with some demand side measures to boost consumption (which has been ignored for a long time), which Vijay summarized as “from atmanirbhar to jeebon ko bhar bhar” (put money into the pockets of consumers).
Markets have recognised this and are rotating (at the margin) into consumption stocks and away from PSUs and infra stocks. Sorbh is also aligning his portfolios with the likely new realities.
Sorbh shared some insightful thoughts on practical implementation of asset allocation:
- Asset allocation is a journey and not aone-time exercise
- Asset allocation strategies vary significantly across the risk-return spectrum. At the start of your investment journey, recognize that your risk capacity is low (even if you think your risk appetite is high). Go for more basic asset allocation strategies that provide diversification as the outcome.
- Migrate into more dynamic strategies (from asset allocation to asset selection) with a portion of your accumulated wealth, when you get to that stage
- Consider the next level – sector selection strategies either from products created by fund houses or in consultation with your advisor/distributor. Ensure this is only a small segment of your portfolio.
- MFDs and advisors today have a wide range of products (active and passive) which can help them tailor specific asset allocation strategies to suit individual client needs. Gain familiarity with them and use them effectively.