Does your portfolio have Gold?

Gold rates breached the Rs 50,000 per 10 gms mark for the first time in history. Price of the yellow metal has surged more than 28% during this year. We made a case for a Gold allocation in your portfolio last October premised on two factors – 

1/ Gold has positive and inflation-beating expected returns in the long run while having a very low correlation with equity markets. So gold does well in times of distress in the equity markets – times such as a pandemic, war, trade war etc.

2/ Gold is priced in USD and thus also acts as a currency hedge against INR depreciation.

 

What we had written then was –

 

 

What gold loses in return expectation it more than makes up for in correlation and thus diversification benefits. Gold, you see, is a team player. And at times when Nifty 50 is not performing due to crash fears, wars, natural hazards or disasters, gold does well.

It helps you tide over the bad times much better. Or you could say, when the going gets tough, gold gets going.

In the past 29 years of data, the correlation of monthly gold returns and monthly Nifty50 returns is just 0.3%! 

 

 

Both the above factors, in our opinion make Gold a strong candidate for inclusion in your wealth portfolio.

Source: goldprice.org | Till June 2020

 

We believe a 10 – 15% gold allocation is ideal for most investors. But the recent rally in gold (chart above) and the subsequent interest of investors in gold has us worried. It seems like we are being guilty of some return chasing here – what we call the behaviour gap.

 

So what does an investor do?

1/ You may already have a gold allocation through family jewellery. Start tracking it here

2/ Increase your gold allocation for the right reasons – to diversify your portfolio and to add an INR depreciation hedge. Don’t add gold for quick riches based on recent returns as they may or may not come.

3/ If you already had a substantial gold allocation, then this is the time to sell parts of it to rebalance into debt and equity. Yeah, always rebalance based on your asset allocation.

 

Index Returns

Index 1W 1Y 3Y P/E P/B
NIFTY 50 2.7% -0.7% 3.9% 29.4 3.2
NIFTY NEXT 50 -0.1% 0.8% -1.6% 31.8 4.0
S&P BSE SENSEX 3.0% -0.5% 5.8% 25.4 2.9
S&P BSE SmallCap 1.4% -2.5% -6.9% NA 1.9
S&P BSE MidCap 1.3% -2.6% -3.5% 29.5 2.2
NASDAQ 100 -1.5% 33.0% 20.5% 33.0 6.4
S&P 500 -0.3% 7.7% 9.2% 23.6 3.4

Source: BSE / NSE

 

Top 5 best performing funds

Name 1W 1Y 3Y
DSP World Gold 7.0% 59.0% 22.9%
HSBC Brazil 6.0% -24.0% 0.8%
Nippon India Gold Saving 4.7% 45.6% 20.2%
SBI Magnum Comma 4.6% 10.3% 2.9%
Kotak Gold 4.6% 47.0% 21.1%

Source: Kuvera.in

 

Top 5 worst performing funds

Name 1W 1Y 3Y
Edelweiss Corporate Bond -3.8% 2.7% 0.5%
Nippon India Japan Equity -1.6% 11.6% 8.5%
PGIM India Credit Risk -1.1% -1.9% 2.2%
Edelweiss Low Duration -0.8% -1.8% 0.3%
Tata Pharma & Healthcare -0.8% 34.1% 10.7%

Source: Kuvera.in

 

What Investors Bought

We saw the most inflows in these 5 Funds –

Name 1W 1Y 3Y
Parag Parikh Long Term Equity 1.3% 18.1% 11.7%
MOSL Nasdaq 100  -1.8% 44.3% NA
Axis Mid Cap 0.9% 14.0% 10.1%
Axis Long Term Equity 0.6% 2.8% 6.4%
Kotak Gold 4.6% 47.0% 21.1%

Source: Kuvera.in

 

What Investors Sold

We saw the most outflows in these 5 Funds –

Name 1W 1Y 3Y
ICICI Prudential Nifty Index 2.7% 0.1% 4.7%
Axis Focused 25 0.9% 5.3% 7.1%
ICICI Prudential Bluechip 2.1% -0.8% 3.6%
HDFC Mid Cap Opportunities 0.5% -1.8% -1.9%
HDFC Index Nifty 50 2.7% -0.4% 4.8%

Source: Kuvera.in

 

Most Watchlisted Fund

Top 5 funds added to watchlist by Kuverians

Name 1W 1Y 3Y
PGIM Global Equity Opp.. 0.8% 49.0% 27.5%
Parag Parikh Long Term Equity 1.3% 18.1% 11.7%
Franklin India US Opp… 0.9% 33.7% 24.6%
Axis Bluechip 1.4% 7.0% 10.8%
ICICI Pru US Bluechip Equity 0.0% 20.4% 17.6%

Source: Kuvera.in

 

Top ELSS funds

Name 1W 1Y 3Y
BOI AXA Tax Advantage 3.1% 17.6% 6.6%
Indiabulls Tax Saving 2.8% -0.9% NA
Tata India Tax Saving 2.6% -0.3% 3.2%
Baroda Elss 96 B 2.6% 0.6% -1.1%
Canara Robeco Equity Tax Saver 2.6% 9.5% 8.0%

Source: Kuvera.in

 

Most Watchlisted Stocks

Top 5 stocks added to watchlist by Kuverians

Name 1W 1Y 3Y
RELIANCE INDUSTRIES 4.8% 49.2% 38.5%
HINDUSTAN UNILEVER 7.3% 34.0% 24.0%
HDFC CORP -7.0% -20.7% 4.0%
INFOSYS 15.7% 15.2% 23.0%
LARSEN & TOUBRO -2.0% -36.7% -8.4%

Source: Kuvera.in

 

 

Announcement

1/ Indiabulls Mutual Fund has appointed Ambar Maheshwari as a Whole-time Director on the Board of Indiabulls Asset Management Company Limited.

2/ In a move to increase transparency, SEBI has mandated fortnightly portfolio disclosure for debt funds. In its circular, the market regulator has mandated that debt mutual funds disclose their portfolio every 15 days, from the current 30 days. Additionally, SEBI has mandated disclosure of yields of all underlying securities. At present, mutual fund schemes typically disclose the yield of the entire portfolio and not of individual securities. These changes would come into effect from October 1, 2020. 

 

 

Quote of the week:

 

 

Don’t gain the world and lose your soul;

Wisdom is better than silver and gold.

: Bob Marley.

 

 

Interested in how we think about the markets?

Read more: Zen And The Art Of Investing

 

Watch/hear on YouTube:

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