It has been a year since we introduced the Money Today- Value Research Lifestage Model
Fund Portfolios in our June 2010 issue. We are happy that the four portfolios endured all the ups and downs of the last year's erratic market and were able to perform decently as well.
The portfolios had made a steady start in a market that was hit by
heightened volatility due to the European financial crisis. In July 2010, that is two months after its inception in May, two of the equity-oriented portfolios - Wealth Maximiser and Money Builder - outperformed the benchmark 50-share Nifty, that too at a significantly lower risk.
The portfolios continued to give excellent returns in the following months as well. The October data showed a 12.5% and 10.4% absolute return from Wealth Maximiser and Money Builder, respectively, while the ultra safe Income Generator earned a 4.1% return. This had then reaffirmed our strategy of investing through systematic investment plans (SIPs) as the best approach to tackle instability.
The SIP strategy was validated even when the markets started sliding since the beginning of 2011. Though the past two months performance sheet registered some losses and the portfolios suffered, we were able to buy units at cheaper prices. This will prove to be a profitable deal in the long run.
It is worth noting that despite the swinging Sensex hitting multi-year highs (the market touched 21,000 on 5 November 2010) followed by heavy corrections, a prudent mix of good mutual funds had ensured automatic rebalancing which were in sync with the risk appetite and mandate of each fund.
This had helped in controlling the exposure to equity and thereby the risk. Although the liquidity tightening measures by the central bank and continuous hike in interest rates hampered the debt portfolios, investments in healthy sectors like financial services, energy, FMCG, technology, etc., helped in maintaining the performance.
We should remember that these mutual fund portfolios, designed by Value Research, were aimed to help our readers achieve their long-term financial goals. Therefore, expecting them to give stunning returns in a year's time would be asking for too much. They are simply not built for it. So, if you had replicated these models hoping for short-term gains, you would be disappointed with the returns. However, an investor with a long-term perspective is sure to be rewarded as the portfolios build wealth in a steady and systematic manner going forward.
