Asset class |
2020
return |
Gold |
27.00 |
PPF |
7.10 |
NSC |
6.80 |
Debt ultra short |
5.13 |
Post office 3-year deposit |
6.90 |
Debt Liquid |
3.96 |
Fixed deposit (1-3 years) |
5.30 |
Nifty 50 |
14.90 |
Nifty Midcap 100 |
21.87 |
Nifty Smallcap 100 |
21.47 |
|
|
icAdvisor average |
39.71 |
That Gold gave the best return amongst the above asset classes during the pandemic was not that much a surprise. The bigger surprise was that the Nifty managed to give a positive return at all. The pandemic had so scarred investor sentiment during March and April that the turnaround during the rest of the year was nothing short of sensational. In the midst of all of this, I am happy to report that the average performance of all icAdvisor managed portfolios during the year clocked in at just short of 40%. This was almost thrice as much as the Nifty and about twice as much as the Midcap and Smallcap indices. Here is how many of our client portfolios outperformed these three indices in percentage terms during the year
Index |
%
folios outperforming the index |
Nifty |
88.46 |
Nifty Midcap 100 |
80.77 |
Nifty Smallcap 100 |
80.77 |
The Nifty saw two trends during the year – a big downtrend at the start of the year followed by an even bigger uptrend for the rest of the year. The quantum and duration of these trends were as follows:
Trend |
Quantum% |
Period |
Downtrend |
-38.6 |
Jan to Mar |
Uptrend |
80.4 |
Apr to Dec |
These two trends can be easily seen in the daily chart of the Nifty during 2020 below.
- Asset allocation – Diversify your financial assets across Debt, Equity, Real Estate, gold, International Equity, etc. depending on your risk profile and age. Real Estate and Gold assets should ideally be used to satisfy consumption needs only. One simple rule of thumb to do this quickly is to subtract your age from 100. The number you get should be the percentage of your assets that you should allocate to equity - the rest should be allocated to Debt and other assets.
- Financial planning - Identify your financial goals and classify them by time horizon – short term, medium term and long term. Use Debt assets to achieve short term goals, mix of Debt and Equity assets to achieve medium term goals and Equity assets for achieving long term goals. This will be the basis of your financial plan.
- Reviewing your plan - Review your financial plan yourself or with the help of your advisor at least once a year and make adjustments to your asset allocation depending on the prevailing market situation.
- Invest right - When it comes to equity, invest in quality businesses and then have the patience to allow markets to give you returns. This calls for having patience even in the face of volatility. Speak to your financial advisor whenever you are in doubt and need a second opinion.