As we end the quarter July -September 2016, we are happy to share the results of IndusWealth model portfolio.
Results for IndusWealth can be downloaded from the links below:
- Summary of the returns
- Portfolio performance summary
- Benchmark return calculations
- Transactions in the model portfolio
- Stock wise returns for the model portfolio
We are in a market where the valuations are fairly rich – P/E is around 24 and we are witnessing significant volatility. US elections, FED policy, Brexit, slowing down in China’s growth, immigration crisis due to various terror activities, oil prices are all adding to uncertainty. Domestically we are perennially in an election mode, and there is always a risk of populist measures derailing the overall growth agenda.
We may be dealing with significant amount of uncertainty & volatility in the short to medium term. For long term investors the key risk is not short or medium term volatility but their ability to identify reasonable opportunities for investments and their ability to stay invested over long periods of time.
Equity markets generally favor investors with long term horizons. With the market P/E of near 24, investing in equities is advisable only for investors with more than 5 year investment horizon.
We have been consistently advocating disciplined long term investments. Recently Vikatan approached us for an article discussing the benefits of long term investing. Sharing this in this forum as this could be of relevance to this discussion. This article will be published in Vikatan over this weekend.
For this article, we analyzed returns of companies over a period of 10 years. We picked companies whose current market capitalization is over ₹ 15,000 crore and have given consistent returns over the last 10 years. Please note that this 10 year horizon includes the crash in 2008.
Following are the top 15 companies that have generated best returns for monthly SIP investors.
A person who has been investing through a monthly SIP in a Sensex Index fund would have generated 62% return on her investment over a 10 year period.
Same monthly SIP in top 15 companies would have given an average return of 1360%
- SIP of ₹ 1,000 a month in Sensex would have a profit of ₹ 74,400 in 10 years.
- SIP of ₹ 1,000 a month in Ajanta Pharma would have a profit of ₹ 94,16,500 in 10 years.
- SIP of ₹ 1,000 a month in Berger Paints would have a profit of ₹ 9,75,700 in 10 years.
- SIP of ₹ 1,000 a month in Pidilite would have a profit of ₹ 5,78,200 in 10 years.
- SIP of ₹ 1,000 a month in all 15 companies would have an average profit of ₹ 16,33,500 in 10 years.
Key conclusions we can draw from this analysis:
- Equity investments generate excellent returns for disciplined investors with long term horizon.
- SIP strategy is very effective in handling the market fluctuations as they average ups and downs.
- Investors who are not keen on investing in direct equity will benefit by investing through SIP in an Index fund
- Direct equity gives much more robust returns for disciplined investors with a robust process for identifying investment opportunities.
We continue to believe in the long term prospects of Indian markets and economy. We encourage you to be long term investors and benefit from the value creation process. We also suggest that you invest meaningful sums so that this great compounding machine will make a reasonable difference to your portfolio.