Systematic gains

Disciplined investment has helped the MONEY TODAY-Value Research Lifestage Portfolios perform well yet again despite the prevailing uncertainty in the rising market.

Print Edition: October 2010

Along with the rest of the country, Dalal Street is set to celebrate this festive season. The BSE Sensex closed above 19,000 for the first time in September since 2008, the industrial output is up by 13.8 per cent and easing concerns about the European debt troubles have bolstered the Asian markets.

The economy looks strong and the government expects an 8.5-8.75 per cent growth in the current fiscal. However, some analysts are predicting short-term volatility and market correction in the near future.

This is due to worries over the slow recovery in the global markets and a possible dip in the robust FII inflows.

This is the reason investors continue to switch between risk aversion and tolerance, with the more daring trying to time the market to combat the uncertainty.

At such a time, the systematic investment route taken by MONEY TODAY-Value Research Lifestage Portfolios seems to be the safest course. While two of the model portfolios have outperformed the Nifty yet again, the other two have been showing a steady increase in returns.

The Stable Growth portfolio, which has been analysed in detail below, has given an absolute return of 2.2 per cent over a period of five months. It has invested Rs 25,000 across four monthly income plans (MIPs) and one equity-oriented balanced fund.

Considering that the portfolio is in a low-risk zone, with an equity exposure of just 29.6 per cent, it is a healthy return for these uncertain times. The debt component did not perform too well due to speculation on the increase in interest rates by the RBI.

However, the equity portion, which has two banking stocks in the top five holdings, has helped it improve the returns. Besides, most of the holdings are in giant and large-cap companies, making the portfolio more stable and equipped to handle any turbulences. The mid-cap segment accounts for 30.3 per cent of the holdings.

Even though the small-cap indices were buzzing recently, the allocation to this category has been limited to 15.6 per cent, taking into account the high risk associated with such counters.


  • Festive spending is expected to boost the consumer durables and automobile market.
  • Backlash against the outsourcing industry in the US may raise the costs of IT companies.
  • Profit booking may lead to a correction in the market.
  • The second quarter results are scheduled to start flowing in from October.

The systematic investment plans will help in averaging out the cost of purchase and create wealth in the long run. The two portfolios with heavier allocation to equity funds - Wealth Maximiser (86 per cent) and Money Builder (69 per cent) - have given fabulous returns of 7.4 per cent and 6.2 per cent, respectively.

SIP investments in the Nifty on the same days would have yielded a return of 4.2 per cent. The funds have excelled because of their bigger equity components in a rising market.

However, there is also a possibility of correction in the near future as more and more investors choose to book profits.

The Income Generator has done marginally well with an absolute growth of 1.8 per cent. The portfolio was affected by the rise in interest rates by the central bank.

Though the showers in August and early part of September have increased the expectations of a good farm output and easing of inflation, the portfolio might be impacted adversely yet again. This is due to the increase in reverse repo rate by 50 basis points from 4.5 per cent to 5 per cent on 16 September. We will analyse this portfolio in detail in the next issue.

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