Series 70 – Understanding Cycles and Positioning of Portfolios

Last week we had given some data that highlighted how the retail flow of MF has grown over time since 2021. This week we are demonstrating to you the significance of cycles in portfolio positioning.

India in the last 20 years, let us break it down into 4 cycles. The first cycle between 2005 to 2009-your portfolio would have performed even if it had not had any large exposure to banks, IT, or consumers, as we did not observe growth in those sectors. Between 2010 to 2014 to even 2021 if our portfolio had fall short of banking, IT and consumer businesses, it would have significantly hurt the returns generated because this period was a demand led growth and market also saw its share of consolidation phase and these were the sectors that saw growth. Again through 2021 onwards, we are seeing an inflationary cycle where supply side of the economy growing, so businesses like capital goods, real estates, pharma, power etc are a must-have in the portfolio, because this were we find growth pockets.

Understanding these cycles and varying our exposure between the advantageous cycles is how we at Itus have been constructing our portfolios, and it has consistently enabled us to generate alpha. We do not abstain from doing so, even if it means departing from the usual benchmark composition; this is a conscious choice that we make.

We will bring more interesting data to you in our coming episodes.

Also, we keep writing to you about our SIP program that presents investors with a convenient avenue to regularly infuse capital into their portfolios. Feel free to check out the benefits for your clients. If you need more info, reach out to your dedicated relationship manager at [email protected].

These weekly episodes are now available in our website for your quick read and you may access the same in the below link.

Weekly Enlightenment Archives – ITUS Capital