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Indian market lazy portfolio

Indian market lazy portfolio

TLDR: Indian market lazy portfolio of index funds and Mutual funds


The stock market is still wrapped in this voodoo/mysticism for the average retail investor. They tend the follow the crowd, look for random tips from complete strangers on the internet. Make life changing buy and sell decisions without a lot of though. Investing in the stock market has its own set of challenges. Investors need to learn some fundamentals about how to pick quality companies.

  • How do you go through the screening process to arrive at the final list of 5 to 10 short listed ones?

  • Which industries should you go for?

  • Should you go for value or growth sectors?

  • Should I hold defensive sectors?

  • What types of mutual funds should you Choose?

  • Multi cap funds or a mix of large, mid and small cap funds?

  • Should you diversify across fund houses?

  • Should you look at the star rating of funds provided by value research or morning star?

  • Should I invest in lumpsum or SIP?

On and on. For those of us who enjoy tackling these questions and doing the research in getting to an answer it could be fun. But most retail / individual investors just don’t have the time or inclination to perform this research and finalise the list of stocks or mutuals that they would invest in.

So what is an ideal lazy portfolio for the average Indian investor? A portfolio which is very simple, all weather, long term oriented which doesn’t need to be tweaked except for annual rebalancing.

As much as I would like to take credit for this “lazy portfolio” concept, it was the brain child of John Bogle, the founder of Vanguard low cost index funds. If you want to read up on it, you can do that here.

The fund offering in the Indian market is fairly limited especially in the index fund space and is almost non existent in the bond space. So this lazy portfolio is a bit of a compromise when it comes to the Indian market. Hopefully we will get more fund offerings in the near future to fine tune it.

1) Aggressive portfolio for someone with a trading account

Here is a lazy portfolio 70:30 equity to debt split

Equity portion - all direct plans or ETFs

  1. UTI Nifty 50 index fund - 20%

  2. UTI Nifty next 50 index fund - 20%

  3. ICICI Prudential mid cap select index - 10%

  4. Motilal Oswal NASDAQ 100 ETF - 10%

  5. Reliance ETF Hang Seng BeES - 10%

Nifty and Nifty next 50 combined track the top 100 companies by market cap. Item 3 tracks the BSE mid cap select index. These three combined gives you good exposure to large cap and mid cap companies in India.

Items 4 and 5 provide exposure to Nasdaq and Hang seng indices which covers the US and Hong Kong markets, which is your international exposure.

Debt portion

I don’t really have a recommendation for the debt fund. Pick a fund house that you are happy with with the lowest expense ratio and go ahead with that fund. Ideally split between 1 to 2 funds to a total of 30% for the debt portion. If you were to put a gun to my head, I would chose

2) Aggressive portfolio for someone without a trading account

Here is my lazy portfolio 70:30 equity to debt split

Equity portion - all direct plans

I could not fund a Hang Seng index tracking index or FOF. If you can then use that.

Debt portion

Same as scenario 1.


If you are more conservative, then adjust the equity to debt split from 70:30 to 60:40 or 50:50 as you see fit. Bring down the allocation of the individual funds accordingly keeping the ratios intact. Pretty simple isn’t it?

For back testing of the results on these investments in the next post here


Conclusion

The above lazy portfolio is fairly easy to manage and maintain and only need annual rebalancing. Not a lot of additional time on research or analysis required. What would be your equivalent “Lazy Portfolio”. Leave your comments below.

Happy Investing.

Indian market lazy portfolio - continued

Indian market lazy portfolio - continued

Mutual fund industry stats and trends

Mutual fund industry stats and trends