Reconstructing the portfolio

 I have received few messages from the old members of the group, specially.

They're asking for rationale regarding my shift to index fund and back to face on next Nifty and all market index funds.

I fully understand their concern because I have changed my advice and strategy over the years. But this is not unnatural and infact one must keep reviewing once owns stance and portfolio with the changing Times. 

10 to 15 years ago there was no total market fund and index funds were just being introduced with no clear direction from the AMCs.

The large and midcap funds were giving decent returns and the small caps were having a good run. 

On my personal front I was always preferring what are now called Flexicap  funds because the multicap fund had also not had a separate Avatar.

In fact 2018 when various funds were re-classified with not just the change of name but also the mandate.

This naturally disrupted lot of things and before we could say Jack Robinson COVID struck.

After covid there was a massive Bull run which gave astronomical returns across all funds and very soon the valuations became unrealistic.

The small cap and mid Cap fund managers started becoming scared because there were no stocks to buy.

In this entire turmoil which people saw as opportunity I observed that just sticking to 1 particular market cap was becoming very difficult ; as in a short time the scrips were moving from small to mid and mid to large caps. This was making selection of fund very difficult.

Therefore in an attempt to further automate the decision making of investment I decided on two strategies: 

1. Firstly to have one active and one passive fund in the market cap that we were investing. e.g. if you had a large cap fund then add a next Nifty index fund to it.

2.  Secondly instead of trying to catch the Nifty 50 or sensex 30 index fund aim to maximize the profits by investing in more active companies which were less volatile than the midcap and more active than the larger index which is Nifty 50, you can say taking the middle path. 

3. Thirdly I observed that over limited period Nifty 500 give an average return of all the large mid and small cap. And just about 2 years before Nifty total market index was formed which included over 766 top funds of the country. 

In my view this was the best fund which could impart stability to any portfolio without compromising on the returns or any AMC falling out. 

This is a calculated strategy which will work as long as your expectations are not unrealistic and you should not hesitate in making adjustments to the strategy as you move ahead.

You should not limit yourself to this group and take professional advise also whenever you feel unsatisfied with your portfolio. Always select the best advisor and pay the top dollar to get his advice.

But you should always remember to ask the rationale if the advisor suggest some radical changes.