We wish all our
readers Merry Christmas and a Great New Year 2020.
Our next post shall be on 6
January 2020.
Asset allocation
In view of the adverse risk reward ratio and growing divergence
between bond and equity yields, I shall scale back my strategic equity
allocation to 50% from 60% presently. The strategic asset allocation now stands
at 50% Equity; 25% Gold and 25% Debt.
(a) The entire equity allocation
shall remain invested.
(b) Gold allocation will be
mostly invested in gold bonds.
(c) For now, the debt
allocation will be 75% in accrual products and 25% in long duration. However,
if benchmark yields rise to 7.5% or above, I shall move the entire allocation
to to longer duration.
My target return for overall financial asset portfolio for 2019
would be ~8%.
Equity investment strategy
I would continue to focus on a mix of large and mid cap stocks, with
decent solvency ratios and operating leverage.
(a) Target 8%-10% price
appreciation from my equity portfolio;
(b) I shall be overweight
on IT, Insurance, agri input and large Realty sectors and underweight on
consumers (especially FMCG and media). On other sectors I shall maintain a
neutral position.
Equity trading strategy
I shall avoid active trading in 2020.
Miscellaneous
I have assumed a relatively weaker INR (Average around
INR72.5/USD) and stable rates in investment decisions. Any change in these
assumptions may lead to change in strategy midway.
Factor that may require urgent change in strategy
- Material escalation on northern borders
- Prolonger civil unrest
- Stagflation engulfing the entire economy
- One or more Indian states or large PSU failing to honor its debt
