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Ekadashi, Eid & Your Personal Finance – Core & Satellite Investment Strategy

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“Even the intelligent investor is likely to need considerable willpower to keep from following the CROWD.” – Benjamin Graham

Ekadashi or the 11th day of the fortnight of the Panchang (Hindu lunar calendar) is a very important day for many followers. They observe fast on this day and practice self control – physically as well as spiritually. This way they try to cleanse their mind and body every fortnight. Eid ul Adha is a festival of sacrifice. On this day followers are expected to sacrifice their most beloved possession as a gesture of gratitude towards God and in expectation of big reward that God will bestow upon them for the sacrifice.

Similarly when it comes to managing your personal finance, one needs to exercise lot of self control to keep away from the public emotions and the noise. Saving oneself from market noise does not mean to follow “Fill it, Shut it & Forget it” strategy, the tagline Hero Honda used to introduce its bikes. It is equally important to keep reviewing your portfolio periodically and check the investments that are not doing well or the investment that has served its purpose and need a change.

Core & Satellite Portfolio

When an investor embarks upon his or her investment journey, we always advise them to build wealth using a core portfolio created out of plain vanilla products. And once they have their core portfolio in place to meet their financial objective, then they can consider additionally building a satellite portfolio with their surplus funds comprising of a little complex investment products.

Plain vanilla products are the investment products that are easy to understand and require comparatively basic knowledge of investments. Like mutual fund schemes categorized based on their market capitalization based portfolio – Largecap, midcap, flexicap, multicap and smallcap.

Apart from these there are a bit complex investment products that require advance level of knowledge to deal with these products, for example PMS, AIF, P2P or thematic or sectoral mutual fund schemes.

Aditya Birla mutual fund and Kotak mutual fund have launched two such schemes that can be considered to be part of your satellite portfolio.

ABSL Quant Fund – The fund will invest in 40-50 stocks from large & midcap space chosen based on quant theme and following mix of growth, momentum and low volatility with a quality bias investment strategy. The stocks will be reasonably equal weighted with maximum weight not exceeding 5%. It will combine human insight with automation to remove the human bias and benefitting from human wisdom. Machine will maintain a discipline selling stock that hits the signals with no human bias.

Kotak Special Opportunities Fund – Many a times special investment opportunities arise in particular stock when it is available at much lesser price than its fair value. It could be due to regulatory changes or management policy like buyback or merger & acquisition or because of industry consolidation etc. for a layman investor it is difficult to understand the complexities of these situations and their long term impact on the stock price. So they shy away from such opportunities. This scheme aims to invest in companies benefitting from such special situations arising from company specific events, corporate restructuring, government policy or regulatory changes, technology disruptions or companies going through temporary but unique challenges.

Both the above schemes are available under New Fund Offer available upto 24th June 2024 and can be considered to be part of your satellite portfolio. Should you wish to know more or want to invest, please contact your InvestmentMitra or reply back to this message or write to contact@investmentmitra.com.

Thank you.

Happy Investing!                                                                                                                                       Team InvestmentMitra

 

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