An all-equity retirement portfolio

By Kaustubh Belapurkar |  10-12-20 | 
 
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About the Author
Kaustubh Belapurkar, Director of Manager Research, Morningstar Investment Adviser India.

It was interesting to read the personal thoughts of my colleagues, when it came to their portfolio.

Nehal Meshram on how she built her equity portfolio.

Himanshu Srivastava explains his rationale on his DSP, Franklin Templeton and HDFC funds.

Melvyn Santarita on his eclectic selections.

Here I pen down my plan towards achieving my prime financial goal – a nest egg for retirement.

My strategy

I dived right in and opted for an all-equity portfolio. My reasoning has been simple. The runway is long, and I am extremely comfortable with the volatility such a portfolio carries. My aim is to build a diversified, long-term, all-equity portfolio.

My portfolio

I skipped multi-asset diversification but opted for intra-asset diversification. I spread my investments across market capitalization, asset management companies and different styles of fund management.

Interim volatility does not bother me. Neither do I have the compulsion to keep checking my portfolio. I prefer a hands-off approach and to let it grow without too many changes. I do monitor my portfolio every six months to ensure that the funds are true to mandate and serving their intended purpose in the portfolio.

My funds

These funds are extremely well managed by experienced fund managers underpinned by a robust investment process. Additionally, the fund manager styles of these funds are quite varied; an important criteria in picking these funds.

While picking any fund I look at the fund manager skill set, strength of the investment process being plied and consistency with which it has been plied. Besides, the investment style of the fund matters and how it fits into my overall portfolio.

These funds have gone through periods of underperformance. What’s important to understand is the reason behind the underperformance. Is it the fund investment strategy and the market cycle? As long as my conviction in the fund manager and investment process is intact, and there is no style drift being observed, I find it prudent to continue holding on to the investments.

My mistakes

This is typical to the one young investors make. My biggest mistake was that early on in my career I didn’t save and invest as much as I should have. With adequate disposable income at hand, there was always the urge to splurge on fancy cars, holidays and gadgets. What was remaining was invested.

Investments = Earnings – Expenses

The important lesson I learnt was to flip the equation. Fix a saving goal in mind and then spend what’s left after that.

Expenses = Earnings – Investments

Those who can successfully do that and invest judiciously early in their career already have a good start. And if they continue to do so all through their career, they will comfortably build a substantial nest egg. Perhaps even plan an early retirement!

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 judgement 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 .

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Ulavesh Patil
Dec 14 2020 02:38 AM
 I have 2 points to make. Author has a portfolio of one decade old and obviously must have resulted in plenty of Compounding effect and thereby the so called Index Funding may not be suitable. If we keep on investing in existing fund vis SIPs we astonishingly see money is instantaneously multiplies many fold. Thanks Kaustubhji for writing this article.
ninan joseph
Dec 12 2020 08:07 PM
 I like the way the author has written about his retirement planning instead of recommending something where he does not know the risk profile of others. I like that. What I have noticed is the too much dependence is given to the fund manager. How can this be controlled. I do understand that the alpha is generated by the fund manager but depending on him and investing is it a wise choice. What happens if he moves to another fund house. Many experts have advised or talked about these fund managers. Is there any guarantee that a fund manager will continue to remain for a select period or time. How do we manage or control this.
Dinesh Shirvaikar
Dec 11 2020 10:39 PM
 Post SEBI's MF re-categorization why do you want to invest in Large Cap funds? Would Index funds not be a better option? We have seen that Large Caps as a category are failing to beat Index returns consistently over the last 2-3 years.
Index or Index+ funds may be a better option than Large Cap funds at this time.
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