Performance Report: Post-COVID optimism or market jitters?
We've seen a rollercoaster ride for the last 1 year. The economy has recovered now with a new sense of normalcy. The markets had predicted this recovery since Apr 2020 when we saw one of the biggest rallies of this generation.
And with market rallies we have new investors. FY 20-21 saw 1.5 Crore new registered investors. And if you think about it, none of them have ever seen a bear market.
The market till now has only seen minor hiccups in its journey upwards since Jan 2021, and so has our portfolio.
Let us take a look at the YTD performance of the models.
Performance Summary vs NIFTY50
Model 1 has performed exceptionally well with an 85% return vs a 24.2% for NIFTY50 since the start of the year.
This brings the overall figure for Model 1 to 175% vs 60% for NIFTY50 since inception (from July 2020).
Model 2 has not done as well, with 82% return since inception. 2021 was not that strong for Model 2. This difference arises because of the rate of change of stocks, ie. Model 2 holds stocks for a longer period than Model 1, and due to the stock selection mechanism.
NIFTY Long Short is the only model which did not beat the benchmark, with a 6% return for the year. But as the market starts to trend again, we hope to see NLS recovering lost ground.
Model 3 was introduced only in July 2021. Hence its returns are benchmarked against the NIFTY Midcap index for the same period above.
Model 3 has returned 21% since July 2021, while the NIFTY midcap has given an 10% return in the same period.
Graph from Jan 2021 - Dec 2021
As we can see from the graph above, 2021 was definitely the year of Model 1, and hopefully, the momentum will continue (pun intended).
Market outlook and analysis
Investors need to remember that while the market is uncertain in the short term, the biggest mistake one can make is to exit now and hope that the market falls to re-invest.This is especially for the new investors who don't realise that the last 1 year was not the norm. Going forward we expect that the market will not give the same level of returns.
Omicron would have a short term impact, but the long term is still looking good for Indian Equity market.
That said, diversification is a necessary step to hedge against sudden market movements. Short term investments should be made in govt bonds or debentures.
The money that investors are adding in Equity needs to be for a long term horizon rather than short term, otherwise you may be forced to exit during a downturn.
All the best for your investment journey and may the new year bring you good fortune!
