Question

You set up a portfolio made up of five o six funds.Analyse the portfolio you have set up taking into account the risk return criteria and taking into account the macro economic factors of the economy .Explain why you prefer managed funds or exchange traded funds or a mixture of the two.Explain in detail these funds and why you like these funds.You need to match your asset allocation with your risk profile.

Answer 1

Risk-Return : Stability with moderate return.

Asset Allocation is a concept widely used in portfolio management. Returns depend on market condition,being conservative and investing more in bonds will feel good in a down-trending market and feel bad in uptrend market.

Portfolio with weights:
Gold ETF (30%)
Liquid Bonds based ETF (20%)
NASDAQ Index ETF (15%)
Dow Jones Industrials' Average Index ETF (15%)
Nifty Index ETF (20%)

How the portfolio provide stability? Markets negative, Gold positive and liquid bonds maintaining capital.
How the portfolio provide return? Gold has more upside in crash markets as of today, Liquid bonds provide high stability meanwhile Equity providing volatile returns.

Considering Macro-Economic Factor: Gold ETF and Liquid bonds don't need much analysis on macro-economic factor. Meanwhile, Index-based ETF needs analysis majorly regarding the economy of the country as Stock market indices reflect Economy growth. Developing economy has more upside growth as compared to Developed economy.

Why I liked these ETF?

• Gold ETF is a high demand asset at all times. Its often called an all-weather investing.
• Liquid Bonds provide a considerable return in downside market meanwhile providing stability.
• NASDAQ & DJIA Index ETF provides Return to the US equity market.
• Nifty Index ETF provide return to Equity market of India's developing economy.