Discover and read the best of Twitter Threads about #Assetallocation

Most recents (24)

If #retirement is on the list of #goals you’re investing for, should the current high #inflation lead to any change in your plans? Here’s our take: (1/5)
If annual inflation is at 7%, monthly #expenses of Rs 50,000 per month today, would become Rs 1.9 lakhs per month, in 20 years. At 5% inflation, it would become only Rs 1.3 lakhs per month. It’s best to overestimate, err on the side of caution and invest accordingly. (2/5)
At the same time, it doesn’t help to panic and look only at the short term. Just stick to your #assetallocation, and continue your SIPs. If you think your #SIP investments won’t take you closer to your retirement goal, consider increasing allocation to equity MFs. (3/5)
Read 6 tweets
As the world watches the Twitter vs #ElonMusk saga unfold, and questions, “What is happening?”, let’s take look at a question that’s been on many investors’ minds for a while - “What does #assetallocation actually mean, and why should I care?” (1/6)
The short answer (within 280 characters), is that asset allocation divides your investments across different asset classes like #equity, debt, #gold etc., in order to achieve a specific investment goal, at a certain growth rate. (2/6)
Why is this necessary? For starters, it ensures that you stay invested for the duration needed, while also helping you decide how much you should invest in sub-asset classes like #large-cap or #mid-cap equity, low duration funds or liquid funds. (3/6)
Read 6 tweets
#AMCs are manufacturers and will offer a basket to select from. Would anyone have invested if they came with NFO in March 2020?

It is duty of #Advisors/#Investors to invest or ignore. Just because AMCs offer is no criteria to invest.

Need to introspect before blaming others
Same is the case with IPOs, their timings and their valuations. Companies also come with #IPOs when markets were on a roll.

Again, investors had a choice to invest or ignore.

They invested with GREED and FOMO and now blaming others for these IPOs bombing
Why can't #Investors respect market signals? When going was good, they ignored advice of following #AssetAllocation.

When markets are bleeding, looking at scapegoats for their own actions.

This is #SelfAttribution bias. All good - their skill, all bad - blame it on others
Read 4 tweets
🚨Worth studying: 👇
"The Anatomy of the Bond Market Turbulence of 1994" - Bank for International Settlements

link in thread below. 🧵

#banks #riskparity #assetallocation #risk #riskmanagement #rates #us10y #bonds

1/ ImageImageImage
2/

Link to the paper from Bank of International Settlements

#banks #riskparity #assetallocation #risk #riskmanagement #rates #us10y #bonds

bis.org/publ/work32.pdf
Read 8 tweets
Update of #AssetAllocation strats in my package with yesterday's return. Brutal.
Worst static allocation: Sandwhich -12.4% YTD
Worst tactical allocation: Dual momentum -7.9% YTD
Best (least worse) static: Conservative income -6.85%
Best tactical: Ivy +1.36%
YTD statistics for static allocations.
All max drawdown for the year = cumulative return
Read 5 tweets
A quick thread on Asset Allocation

Asset Allocation is an essential component of anyone's investment journey!

Fancy translation; asset allocation is the breakdown of different investments in the categories known as asset classes. Stocks, bonds, cash are different asset classes.
Within each asset class, there are more breakdowns that categorize each investment like market capitalization, sectors, geographical locations etc. etc.

But in practicality, asset allocation is to diversify depending on an investor's risk tolerance.
Each asset class has anticipated risk and return based on historical averages.

Based on how much risk an investor is willing to take, a portfolio can be broken down within several categories to provide diversification and balance.
Read 9 tweets
An educational #Thread on Personal Finance Rules we all must know. Have sorted the rules & explained those which are less known to every1 & are very imp. as got many requests to share in details.

Rule of 70
4% Rule for Financial Freedom
100 minus ur age rule
50-30-20 Rule

1/n
1) "Rule of 70"

Divide 70 by current #inflation rate to know how fast the value of ur investment will get reduced to half its present value.

Inflation rate of 8% will reduce the value of ur money to 1/2 in 8.75 yrs.

1 should always consider while calculating net returns!

2/n
3) "4% Rule for Financial Freedom"

Corpus Required = 25 times of ur estimated Annual Expenses.

E.g- if ur annual expense after 45 years of age is 500,000 and u wish to take VRS then corpus with u required is 1.25 crore.

Put 50% of this in fixed income & 50% into equity.

Cond.
Read 6 tweets
Lot of #AMCs come up with different ideas, themes, sectors.

These are demands from #Investors as they have done well in recent past.

AMCs are manufacturers & will offer what is in demand.

Final choice to say YES or NO lies entirely with Investors based on their #NEEDs
What should investors choose and what should they ignore. A point by point guide on where and why to invest in certain #themes, #MarketCap bias, #Sectors, #AssetClasses etc.

What should be criteria for these selections and what should guide them to resist from Investing?
Lets start with #Debt:

Keep enough money as 1 year of your expenses as #EmergencyFunds in #LiquidSchemes

You already have enough exposure to debt as:

1. #PPF
2. #TaxFreeBonds
3. #FDs

No need for separate debt allocation if you are investing thru #AssetAllocation (AA) or #DAAF
Read 16 tweets
We have been told following:
1. Time in market more important than timing the market
2. Long Term is 5 yrs plus

Chart will prove the above wrong. First, timing the market is more important then time in the market

Entry as important as Exit points. There are many such examples
Investing at right Valuations is of paramount importance

Cannot buy at any levels and expect good returns going forward

If bought at expensive valuations-long term may change from 5 to 7 to 10 years

From 01-01-08 to 01-01-21 - 14 years NIFTY - 7.63% p.a. -sub optimal returns
When one invests at expensive valuations-like current period, you are eating into future returns

In such instances, tone down your future returns expectations

Otherwise you will have regrets and disappointments in future

Invest wisely without having #FOMO thru #AssetAllocation
Read 4 tweets
2 Our goal is to show, as objectively as possible, the discrepancy between the intrinsic and the current value of the S&P 500 and what it implies for future returns.

@jessefelder @LeutholdGroup @HorizonKinetics @Not_Jim_Cramer @patrick_oshag @5thrule @MacroCharts @macro_srsv Image
3 Our conclusion is that the S&P 500 is not likely to have a positive nominal total return in the next 10 years and a ‘miracle’ would be needed to achieve positive real total returns.

@CliffordAsness @RA_Insights @GestaltU @choffstein @hblodget @hkuppy @42macroDDale @verdadcap Image
Read 18 tweets
Market participants are going ga-ga over past one & half year returns since March 2020 till now. They are analysing returns in Bits & Pieces.

I do not think many have even participated in this rally as most exited in March 2020, waiting for further corrections
They are conveniently forgetting recent past corrections and drawdown.

Lower the drawdown, faster the bounce backs
Ideal way to look at returns is as a continuous journey. That can give true picture of what Investors would have generated in any scheme.

In spite of euphoria - look at NIFTY Small or Mid Cap 100 returns from 01-01-2018 till 27-09-2021 + attached volatility v/s other DAAFs
Read 4 tweets
My thoughts on NFO of @KotakMF Multi Cap Scheme:

Post recategorizations of schemes, most erstwhile Multi Cap Schemes were converted to Flexi Cap schemes where Fund Managers can decide what Allocation to which Market cap bias.

bit.ly/3BCX9mW

@NileshShah68
Thanks to that, there are very few Multi Caps available now which allocates min 25% each to Large, Mid and Small Caps and balance 25% that can be at the discretion of the Fund Manager.
What is the benefit of Multi Caps?

1. It takes away Fund Manager bias of going overweight or underweight in any market Cap bias

2. Most Flexi Caps are overweight on Large Caps
Read 7 tweets
My interview with @MubinaKapasi on the Money Show on @ETNOWlive : what is #AssetAllocation and how does #DAAF fit into AA:



Currently it makes sense to do SIP/STP into DAAF and then switch to Equity on corrections

Don't worry it is my interview only😀😉
At this juncture if you have FOMO, you may regret in future. As Harry Markowitz said in his Thesis on Risk-Reward Tradeoff:

VISUALISED MY GRIEF WHEN MARKETS WENT DOWN AND I WAS 100% IN IT OR WHEN MARKETS WENT UP, I WAS'T IN IT. INTENTION SHOULD BE TO MINIMISE FUTURE REGRET
Our Value STP follows 1X, 3X, 100X formula:

Lumpsum in Liquid/Equity Saving and switch into:

1X - in DAAF in Red Zone (current)
3X - in Equity in Yellow Zone
100X - Equity in Green Zone
Read 7 tweets
Many have asked me about spate of IPOs and NFOs launches and my thoughts. Should they invest or not?

Another question: why are AMCs launching NFOs at expensive valuations?

My thoughts on this subject:
If you had bought 5kg of sugar from a grocer & you order another 2kgs next day, will the grocer not sell you more? They are in the business of selling you day to day groceries.

What and how much you need is your choice as a customer. You cannot blame the grocer for selling
Put differently:
Which medicine(scheme) needed for which patient(Investor) is job of a Doctor(MFD) or patient(DIY Investor). It is not job of Pharma Companies(AMCs).

Just because Pharma Cos repackage the medicines, does not mean patients should increase their dose
Read 8 tweets
Infrastructure Investment Trusts (InvITs)

InvITs are infrastructure developer-sponsored trusts that own, operate, and invest in completed/under-construction projects which entitle the unit holder to receive a share of the income generated by the InvIT from its assets.

(Thread) Image
1/What are these Infrastructure Assets?
These can be roads and highways, power distribution networks, telecom towers, fiber optic networks, etc.

𝑵𝒐𝒘, Let's say we have an infra company that specializes in constructing roads & highways on a Build-Operate-Transfer (BOT) basis,
2/ means company will build roads, operate for a period of time (collect toll as income) & on completion of tenure, will transfer to govt.
If co. needs funds for construction, it will have to raise either by selling shares (equity), taking a loan (debt) or it can opt for an InvIT
Read 21 tweets
Asset allocation refers to an investment strategy in which individuals divide their investment portfolios between different diverse asset classes to minimize investment risks.

There is no simple formula that can find the right asset allocation for every individual.

(thread)
1/ An Portfolio Distribution is influenced by factors such as personal goals, level of risk tolerance and investment horizon.

As there are multiple options for investment, on the basis of risk, can be classified into 3 categories, "High Risk", "Medium Risk" & "Low Risk". Illustrative list of Assets
2/ "With great risk, comes great reward." - Thomas Jefferson.
But remember "For a low return on investment, the risks are also relatively low."
Read 13 tweets
1/10

We all wish to be #FI
Investing sensibly is the only way to achieve this.

Hence #AssetAllocation becomes important , as we need to, BOTH PROTECT & GROW OUR CAPITAL to meet our goals in life.

A basic thread in simple language for beginners.

If useful , pls do share 😇🙏
2/10

Asset Allocation is an Investment Portfolio technique .

It aims to mitigate the risk by distributing our investable surplus across different asset classes like Equity, Debt, Gold, Real Estate, MF, Cash or Alternates after Risk Profiling of the investor.

An example 👇
3/10

ITS NECESSITY

Every Asset class has its risks & it's impossible to predict which would fetch the best possible returns.

Imagine if one had invested only in Equities in 2007/ 2019 or in Real Estate at its peak in 2011 with a hefty loan with no shock absorber in place ! 🤷
Read 10 tweets
US tech stocks have been hit hard, as attention focuses on the underlying quality of themes like the migration to electric vehicles.
Yet this shakeup is also happening against the backdrop of a fast-changing investment environment due to a strengthening US growth outlook, rising inflationary pressure and an unnerved bond market which is driving yields higher.
In this video interview, Will Denyer seeks to unpack these dynamics in order to navigate a course through difficult trading conditions. vimeo.com/521265797 #assetallocation #equities #us #stocks #bonds #economy
Read 3 tweets
While our February 18th monthly client call argument for rising #RealRates appeared prescient, we were surprised by the magnitude of last week’s #move and would expect a more benign evolution toward #equilibrium going forward.
Taking a stab at periodizing the past year: 1) in Feb/Mar 2020 the Covid crisis was priced into #markets, real #rates spiked higher, #inflation breakevens collapsed and #investors scrambled to raise #cash as the #SPX experienced its fastest 30% drawdown in history.
Then, 2) from Apr through Oct 2020 we witnessed the #market impact of monumental #monetary and #fiscal policy responses to the #crisis, as policymakers successfully sought to force #real rates down and restore #inflation expectations.
Read 10 tweets
Key takeaways from amzn.to/2ZwkCVC... A thread 1/n
Create three different accounts :-
Income account,
Spend-It account,
Invest its account.

Transfer the money in respective accounts ASAP after receiving (salary/income) every month, without fail.

2/n
Next step is to track your expenses. Use whatever resource you want to use. There are numerous expense tracking apps are available.
3/n
Read 22 tweets
It’s been an especially stormy start to the year for the UK, which finds itself at ground zero for the spread of a new and highly infectious strain of the coronavirus, even as it struggles to cope with withdrawal from the European Union’s single market and customs zone.
Yet the UK’s financial markets are performing relatively respectably year-to-date as investors focus on the UK’s strong vaccination performance and look ahead to the possibility of economic reopening and recovery.
In this video interview, Nick Andrews examines the forces at work and weighs the risks facing the UK economy and markets. vimeo.com/505535421 #UK #Brexit #pound #sterling #assetallocation #EU #singlemarket
Read 3 tweets
President Joe Biden’s planned US$1.9trn fiscal support package for the US economy may provide a metaphorical shot in the arm for at least some emerging markets, partially offsetting the negative economic effects caused by the delayed rollout of actual coronavirus inoculations.
With US consumers likely to spend much of their cash handouts on imported goods, Biden’s package is good news for Asia’s emerging market exporters. Meanwhile, domestic demand in the emerging world is set to remain subdued through 2021.
In this video interview, Udith Sikand assesses the conflicting forces affecting emerging economies, and identifies this year’s potential winners and losers. vimeo.com/502924512 #assetallocation #em #emergingmarkets #interview #asia #exporters
Read 3 tweets
1/14
* Some practical tips on #PersonalFinance & #Investment *

Met someone who lost heavily in markets( sizeable amt) which makes me write this thread .

DISCLAIMER : There are exceptions always.However the chances of us being in that exception is rare !🤷 Hence the thread.
2/14

Pls DON'T ENTER markets without ensuring you have
- An Emergency Fund in place
- A good comprehensive Life & Health insurance policy for all .
- Term Insurance ( especially if taken a house on loan)

More details given in the old tweet.
3/14
* INVEST SURPLUS ONLY *

Consider investing in markets as money locked in ( like in a PPF account) for a few years atleast & THEN decide how much money you CAN AFFORD TO LOCK IN.
Else we may have to sell ( even a good)stock at lower price BECAUSE we need money urgently .
Read 14 tweets
#ETMONEY has been leading the charge in providing the most seamless MF investing experience. And now after 4 years & 11 million transactions, we wanted to look at how #Indians are investing and what changes have happened in these 4 years. Time for India Investment Report #2020
First up - The tale of States. While Maharashtra sits pretty on top in the list of top contributions by value, Uttar Pradesh, a relatively less obvious state takes second spot. We're proud to have made investing accessible to Indians in every nook & corner of this vast country🙂
In the second part of this tale of states, we analyzed Equity Allocation from each state. And this time it was the smaller states that came on top. That’s because as awareness about #MutualFunds grow, people from states like J&K are latching onto equities🥳
Read 11 tweets

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