Part 5: Process or How the heck do I Invest in Equity Successfully?
5.14 Manage your portfolio using a multi-asset Portfolio Manager
Do you have the proper tool to manage your portfolio, take better decisions to reach your goals? Is the information of all your assets in one place? What must your Portfolio Manager have or enable you to do so that it is as useful as the dashboard in an aircraft? What risk do you carry in your portfolio?
Managing is a strange word, at least in India. When someone is going through a tough situation and you ask ‘how are you doing?’ chances are you will get ‘I am managing’ as an answer. When someone tells you something can’t be done, its common place to ask them to ‘somehow you manage it’, I really don’t know what that means. But when a government official say ‘yeh nahi ho sakta’ and the answer to it is ‘aap jaara manage kar do’ then we all know what has been said by both parties. Hopefully things are changing.
There is a chance that when you hear ‘Manage your portfolio’ you may not know exactly what you are supposed to do. I have had the opportunity to work as a Consultant and Trainer with many good, market-leading companies and one of the common challenges they face is that their managers, especially Sales Managers don’t know exactly what is it that they are supposed to do that is different than what they did or their colleagues do as a salesperson. And everyone enjoys a good laugh when a Sales Manager is called a Sales Damager. I think there is some truth in this innocuous sounding connection.
You have seen the Investing Process and the System you need to make informed decisions. All the decisions you make come together in your portfolio. Now, you need something to help you make informed decisions at a portfolio level. Most portfolio trackers are designed and used as ‘report cards’-how well you have done and where you screwed up. Instead, you need to look at your portfolio like a pilot look at the aircraft dashboard-a sophisticated device that helps him navigate and stay on course to reach his destination.
Brokers have a record of all the stocks that you have bought and sold usually under Transaction and what you currently own under Portfolio or Holding. They show what you own, how much, the average price you paid for it, the current market prices and the gain or loss that you have on each stock or mutual fund and on the portfolio. This is the classic ‘report card’ portfolio tracker. Some brokers provide you with an analysis of your portfolio and this is helpful but not enough to help you navigate your way to your goals.
What does it mean to make informed decisions at a portfolio level and how do you navigate your investing to reach your goals? You have seen the fundamentals...........Read More
Warning: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Disclaimer: Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provides any assurance of returns to investors.
MoneyWorks4Me method for rating and ranking mutual funds for SIP
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and
ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the
various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Performance Consistency: This is measure based on whether the fund has beaten the benchmark index consistently. For
this we compare the 3-year rolling returns of the fund with the benchmark for a minimum of 5 years and preferable 10
years. The period of rolling is one month and holding period is 3 years. Fund are color-coded Green on Performance when
the fund beats the benchmark more than 90% of the time. It is Orange if it beats 80% to 90% of the time and Red if less
than 80%. Funds with less than 5 year data are color-coded Grey.
Quality of Portfolio Holding: Moneyworks4Me has color-coded stocks as Green, Orange and Red based on whether the
company's performance has generated a ROCE above a threshold level (cost of capital) over 10 years (minimum 6 years) and
generated positive Free Cash Flow. For Banks it checks whether ROE is greater than 15% and sales has grown over previous
year. Stocks that perform consistently on these combined metrics are color-coded Green (min score 14 out of 20), Orange
(between 8 and 14) and Red (less than 8 out of 20).
Fund are color-coded Green provided the portfolio has 70% holding in Green stocks but not more than 10% in Red stocks.
Funds with more than 15% Red stocks in the portfolio are color-coded Red. The rest are Orange funds
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The
ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number
that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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If you're interested in learning more and with a minimum portfolio size of 25 L+, we can help you manage your portfolio, no matter the size. let's connect and discuss how we can work together. And as a bonus, we're offering a FREE Portfolio Review using our "Portfolio Manager" tool during our conversation.
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