maximising returns with curated investment baskets on sharpely
Many legendary investors have repeatedly said that this decade belongs to India. Even Mr. Rakesh JhunJhunwala has famously said, "India ka time aayega nahi, India ka time aa gaya”. So we believe every Indian should benefit from this massive compounding opportunity that the country has presented.
But not all know how to find the best stocks and mutual funds. And many of us don’t have enough time to research as we are busy with our jobs or profession. On top of that, successful investing, in the long run, requires the right understanding of your risk appetite and return expectations. So, how can you benefit from India’s growth even if you don’t know much about the investment world?
The answer is ‘Curated Baskets’ available only on sharpely, one of the best Online Stock Market platforms. Curated baskets are ready-to-invest curated portfolios using Mutual Funds (MFs) and Exchange Traded Funds (ETFs). We will also introduce stock-based curated baskets in the future. Currently, curated investment baskets can be divided into two main groups.
These baskets are ideal for investors looking to generate solid long-term returns by comfortably beating the benchmark. That is why we call them “wealth creators”. Now let’s understand both categories in more detail.
These basket portfolios are made using various types of mutual funds. Currently, we use only Index funds to create these portfolios. Using index funds helps keep the overall cost of the portfolio low. And with the right mix of intelligent asset allocation and periodic rebalancing, one can achieve higher returns than actively managed mutual funds.
At sharpely, we have created different baskets for different risk levels. The primary reasoning is that different investors will have different risk appetites. A 25-year-old investor with a regular monthly income will have a different risk appetite than a 60-year-old investor without any steady monthly income.
That is why we have seven different baskets with risk levels ranging from super-conservative to aggressive. Broader equity and debt allocation is decided based on the basket's risk level.
For example, our super-conservative basket has an equity: debt allocation of 20:80, while our super-aggressive basket takes 90% exposure to equities.
Within the equity allocation, apart from direct exposure to Nifty 50 Index Fund, exposure is also taken to US Equity and Smart Beta Index Funds. It provides an extra return kicker to the portfolio along with international diversification.
If you want to know about each Curated mutual fund portfolio, you can visit our knowledge base, where we have written about them in much more detail, by clicking here.
As the name suggests, these curated baskets are made using Exchange Traded Funds (ETFs). As ETFs have a lower expense ratio compared to traditional mutual funds, these curated baskets have extremely low expense ratios.
Like MF-based curated baskets, these ETF-based ready-to-invest portfolios are also available per the different risk levels. These curated baskets are available in seven different types per the risk levels, from super conservative to super aggressive.
There are different types of asset classes and different weights in each asset class for different curated baskets. These asset mixes and weightage are decided after extensive risk levels and return performance analysis. ETF-based curated baskets are rebalanced quarterly.
We have covered all seven types of ETF-based curated baskets in a detailed blog here. Do give it a read if you want to know more.
But why should I invest in these curated baskets and not directly in stocks or index funds? We have answered this in the next section of the blog.
Our ready-made portfolios have multiple advantages over direct stock investing or traditional mutual fund investing. So let’s look at each of them in more detail.
As our curated baskets are made using ETFs and Index funds, the total expense ratio for our ready-made portfolios is very low. While direct MFs may have an expense ratio of 0.8% to 1.5%, none of our curated baskets have a higher expense ratio than 0.4%.
This lower expense ratio can change your absolute returns drastically in the long run. For example, you invest a monthly SIP of Rs. 1000 for ten years in two portfolios. One gives 10% returns, and the other gives 10.5%, then the latter will generate Rs. 6000 more than the first portfolio. If you do the SIP of Rs. 5000 per month, the difference in the estimated returns of these two portfolios is Rs. 31,000.
Lower costs will help you generate higher returns in the long run.
Curated baskets on sharpely provide you very high level of diversification. It helps you minimize the unsystematic risk mainly arising from the investment portfolio concentration.
As curated baskets invest in ETFs and index funds, they provide solid diversification. Some of our baskets also invest in US Equities, which offers higher geographical diversification. By combining assets of different risk-return profiles, one can achieve higher returns for the same level of risk than one can achieve by investing individually in an asset.
All of our curated baskets are rebalanced either quarterly or annually. As these baskets are made for long-term investors, balancing them very frequently does not make sense.
Prices of different assets may change at a different rate, and based on that, their percentage allocation will also change. As we have decided on percentage allocation based on the risks, periodic rebalancing helps us maintain the target weights and thus “preserve” diversification. Rebalancing also allows us to book partial gains in the assets that have appreciated significantly. So, this is a better strategy than “buy and hold”.
All of our ready-to-invest basket portfolios are designed after extensive analysis of the assets. We consider factor exposures and harvest the risk premia (a bit technical, yes?). But you don’t have to worry about it, as we have created these portfolios so that you can generate solid long-term returns.
Investing in equity is inherently risky. But our carefully designed baskets allow you to generate better risk-adjusted returns in the long run by outperforming the benchmarks.
Curated investment baskets are designed to maximize your long-term returns. You can invest in the basket of your choice per your risk appetite and return expectations. You can also invest in these baskets using the SIP route to generate solid returns.
These baskets provide better risk-adjusted returns and have lower costs; they are ideal for passive investors with limited knowledge or time. Our wealth creators are carefully designed and rebalanced periodically, so they outperform the benchmarks and help you achieve your long-term financial goals.