MUTUAL FUND AUTOMATED PORTFOLIO REBALANCING SYSTEM

(MARS)

Is a technology tool which helps in

• Asset Allocation
• Scheme Selection
• Rebalancing of Portfolio

 ASSET ALLOCATION

• Investing money across equities, bonds and cash
• Key to success for investor wanting to create wealth in long term
• Diff­erent asset classes respond markets diff­erently: equities are volatile in nature, bonds tend to be more stable providing regular income
• Investing in more than one asset class helps to smooth out the volatility

The right asset allocation for any investor is based: 

• Goals – long term and short term
• Time horizon for investment
• How much risk the investor can tolerate

A well-balanced portfolio that uses asset allocation and diversification techniques can help o­ffset the impact of investments that are not performing well and take advantage of the benefits of assets that are growing and performing well.

 SCHEME SELECTION IS IMPORTANT

• There is considerable di­fference between Top quartile performers and Bottom quartile performers
• Indian Market is still a developing market and hence there are sufficient opportunities of spotting multi-bagger stocks
• We believe that better scheme selection is one of the key factors for better performance of the portfolio

 PORTFOLIO REBALANCING

Portfolio values go up and down in line with market movements. It is important to review your investments against your target asset allocation at least annually.

Let us look at the example below. A client creates a portfolio with an asset allocation of 40% in Equities and 60% in debt. Over the next 1 year, due to favourable market movements, his equity allocation increases to 65% while ‑fixed income falls to 35%. At this stage, it is imperative for the client to rebalance his portfolio to his original asset allocation of 40% Equities and 60% Debt.

This will happen by redeeming 25% from Equity and reinvesting the proceeds into Debt.

In boom times, Portfolio Rebalancing helps in booking profits while in bad times, it helps to enter the Equity markets at lower levels.

 INVESTORS PERCEPTIONS AND ACTIONS

Investors invested bulk of their money during the peak period but invested marginally when market fell which was a great time to create wealth.

 BENEFITS OF MARS

• Client can select a model portfolio depending on his requirements and investment needs.
•  Helps the client to invest in well researched mutual fund schemes in his portfolio.
• Simple execution tools for portfolio rebalancing.
• Enhanced returns resulting from disciplined asset allocation.