My colleagues Nehal Meshram and Himanshu Srivastava wrote about the funds they invest in.
It was nice to read about them as investors, as we are all familiar with them being professional fund analysts.
I decided to go ahead and pen down my thoughts. Here is where I share my investing rationale when it comes to my personal investment portfolio.
At first blush, it would appear that my portfolio is rather eclectic. That is possible. But, as I always believe, the portfolio must always reflect the beliefs of investors and not just the convictions of someone else.
My equity funds
Why I picked what I did
I am a great believer of diversification – across asset classes, geographies, asset management company, style of the fund, and philosophy of the fund manager. My fund selection reflects that. They suit my style of long-term investing, offer a value investing tilt and provide the necessary diversification.
I am a great believer in global diversification. Two funds reflect that – PPFAS Long Term Equity and DSP World Gold Fund. When I look at opportunities abroad, I look at sectors and companies not available in India.
PPFAS LTE does not invest in traditional businesses abroad, such as a bank, as there are options here. Instead, the fund manager makes his pick from stocks that are not listed in the Indian stock market - Walmart, Make My Trip, Yatra, Microsoft, Alphabet, Facebook, Tesla, Zoom.
DSP World Gold Fund is a feeder fund, that feeds into BlackRock Global Funds - World Gold Fund. The fund predominantly invests in gold mining stocks, with a small exposure to silver, platinum, copper, nickel and diamond stocks. These mining companies are listed across Canada, U.S., Australia and the U.K.
Mining stocks act as a proxy for the price of the underlying metal, as well as a leveraged play. This is because the value of the company reflects various other issues: size of the mines, tapped potential, untapped potential, effective management, growing production volume, expanded margins, optimization of capital, and so on and so forth. For instance, let us assume gold stocks offered a 3-to-1 leverage. What this means is that when the price of the metal goes up by, say, 1%, typically the share price could go up by 3%. On the flip side, it also means that it could fall harder on the way down.
Gold ETFs are a straight play on the price of bullion.
As for domestic stocks, PPFAS LTE invests 25% of its portfolio in global stocks, the balance is in Indian stocks. And Quantum LTV follows a unique approach and displays a strong conviction to go against the market grain. It is a value fund, and value, as a style of investing, has been out of favour for a few years. That does not perturb me. As long as it follows its process, I am happy to stay invested.
A word of caution.
None of the funds mentioned are recommendations.
This information is for educational purposes only and should not be taken as Morningstar’s research team or its analysts providing you with personalized investment advice.
Investors must exercise their own independent judgment when reviewing investment products and strategies in light of their own objectives, experience, and financial position. Please consult with your own financial professional before making investment decisions.
Disclaimer:
© 2020 Morningstar. All rights reserved. The Morningstar name is a registered trademark of Morningstar, Inc. in India and other jurisdictions. Research on securities, referred to for the purpose of this document as “Investment Research”, is issued by Morningstar Investment Adviser India Private Limited, which is registered with SEBI as an Investment Adviser (Registration number INA000001357), providing investment advice and research, and as a Portfolio Manager (Registration number INP000006156). Complete disclaimers here.
