Stock Market Portfolio: Fear of a fall in Nifty? Look beyond the 60/40 formula to protect a portfolio


with nifty With valuations now looking fair, down 15 per cent from their all-time high and many analysts say, investors are wondering whether they should increase their allocation to stocks and buy fear on Dalal Street. However, geopolitical tensions, fears of a global slowdown, hike in interest rates and rise in commodity prices could add to the pain for equity investors.

So how should a risk-averse investor invest money at this stage? A survey of 11 brokerages by ETMarkets suggests that long-term investors can put up to 80 percent of their capital in equities at this stage, while the more conservative ones should have an equity allocation of anywhere between 30-40 percent. . a good night’s sleep.

None of the brokerages recommend the traditional 60/40 portfolio strategy which suggests investing 60 per cent in equities and 40 per cent in debt.

Deepak Jasani, Head of Retail Research, said, “Risk averse investors can follow the 30:50:10:10 ratio across equity, debt, gold and other asset classes in a normal scenario and with a small leeway, But you can stay.” securities, said.

For new retail investors who are going through a downturn in their portfolios as several largecap and midcap stocks touched their 52-week lows in recent days, analysts say they should not forget That equity is not only a hedge against inflation, but the asset class also provides the highest returns as compared to other asset classes for those who have a long-term investment horizon of 5 years or more.

One can allocate 80 per cent of the portfolio if an investor is committed to stay invested for at least 5 years, as recommended by Roop Bhoot – CEO, Investment Services, Anand Rathi Shares and Stock Brokers.

However, Siddharth Bhamre of Broking suggests that one should look at the market valuation to decide the allocation strategy. “As valuations become attractive, allocation to equities should increase. Contrary to the work of most participants, one should from here onwards increase investment in equities to improve the next 10 per cent, if that happens,” he says.

Brokerage recommendations on asset allocation strategy:

Pankaj Pandey, Head – Research, ICICIDirect

For the average investor, with a medium to long-term horizon, equities should form a portfolio of 40-70 per cent, depending on risk appetite and age.

Vineet Bolinjkar, Head of Research, Securities

We recommend 50 per cent for equities, 40 per cent for debt and the rest for other asset classes like gold. However, this is entirely after the investor has secured a house for himself.

Yash Gupta — Equity Research Analyst, Angel One

We always suggest investors to diversify into different asset classes. Asset allocation depends on the investor’s age and risk appetite, so investors in the age group 20-35 can invest more in equities and 60+ age group should look for fixed income and more investments in gold.

Nishit Master, Portfolio Manager, Axis Securities

One should invest only that amount in equities for a minimum period of three years, if not more. A risk-averse investor who is now building a portfolio, assuming age is in his favor, would get around 40 percent of investable money in equities, 40 percent in short-term fixed income products and 20 percent in gold. Percentage should be allotted. If the equity market further improves, the allocation to equities can be further increased by reducing the allocation to fixed income products.

Shiv Chanani, Head of Research, Elara Securities India

We believe that asset allocation should be linked to the financial goals of the investor. A good rule of thumb for investors to follow is the ‘100 minus age’ rule. (For example if you are 20 years old then you should invest 80 per cent of your portfolio in equities. Decrease this according to your age.)

(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)


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