Role of the mutual funds in the portfolio – Updated 3.0
RECAP
Updated : 1.0 – Very first post on this thread April 2021
Update 2.0 – August 2022
Update 3.0 – Today : August 2024
Listening to the brilliant session by Kedar ( Zygo ) on diversification made me re-introspect my portfolio design. The outcome was very obvious which I already knew. 1) I have a suboptimal stand-alone portfolio design ( direct equity ) which is not diversified across factors. Therefore there is a high risk of my portfolio having a large tracking error in future cycles. A portfolio can lag benchmark/other professionally managed portfolios significantly. 2) But if I attach mutual fund portfolio to my direct equity portion, it starts looking much better in terms of factor diversification
To address point 1) – suboptimal portfolio design – I continue my efforts to improve my portfolio quality. New ideas added in last 3 years – Banks, IT and Vinati – added more factors and also sectors in the portfolio. Also, I am looking to add exposure to new sectors in the portfolio. The current sectors under review are – hospitals and building materials. The challenge for me is – with personal and work commitments along with other interests – execution takes time. Mutual funds + SIP help to bridge this gap very optimally. I believe the portfolio philosophy of my mutual fund holdings is significantly different than mine and also both the funds differ in terms of their philosophies. This provides much-needed factor diversification/risk management and a better foundation for the overall portfolio and buys me time when I am struggling to nurture my direct equity portfolio.
| Subscribe To Our Free Newsletter |
