India markets
Asset class |
2021
return % |
Gold |
-5.19 |
PPF |
7.10 |
NSC |
6.80 |
Debt Long Duration |
3.57 |
Debt Medium Duration |
4.87 |
Debt Short Duration |
4.08 |
Debt Ultra short |
3.48 |
Debt Liquid |
3.2 |
Fixed deposit (1 year) |
5.0 |
Nifty 50 |
24.12 |
Nifty 200 |
27.47 |
Nifty 500 |
30.19 |
|
|
icAdvisorIndia average |
56.12 |
Gold lost its sheen during 2021 after blockbuster returns in the previous two years. Returns from debt instruments were also suppressed during the year. Equity instruments gave the best returns during the year as indicated by the three Nifty broad market indices above. However it is a matter of great personal satisfaction for me that the average performance of all icAdvisorIndia managed portfolios during the year clocked in at just above 56%. This was more than twice as much as the Nifty itself. Here is how many of our client portfolios outperformed these three indices in percentage terms during the year
Index |
%
folios outperforming the index |
Nifty |
88.9 |
Nifty 200 |
88.9 |
Nifty 500 |
88.9 |
The Nifty saw three 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. A small correction was also seen in the last two months of the year. The quantum and duration of these trends were as follows:
Trend |
Quantum% |
Period |
Downtrend |
-39.6 |
Jan to Mar |
Uptrend |
148.1 |
Apr to Oct |
Downtrend |
-6.6 |
Nov to Dec |
These three trends can be easily seen in the daily chart of the Nifty during 2021 below..
USA Markets
Asset class |
2021
return % |
S&P 500 |
26.89 |
|
|
icAdvisorUSA average |
32.42 |
Index |
%
folios outperforming the index |
S&P 500 |
75.0 |
2022 Outlook
As can be seen from the above forecast, among all the large economies, India, China and USA will be the top three fastest growing economies in 2022. This forecast of GDP data can also be correlated and confirmed with the following data point which shows the Unicorns by country in the past eighteen months in the top five economies
- 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 ideally 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 persistence in the face of volatility. Speak to your financial advisor whenever you are in doubt and need a second opinion.
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