Motilal Oswal Asset Management Company Ltd. (MOAMC) is a public limited company incorporated under the Companies Act, 1956 on November 14, 2008, having its Registered Office at 10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025.
Motilal Oswal Asset Management Company Ltd. has been appointed as the Investment Manager to Motilal Oswal Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 21, 2009, executed between Motilal Oswal Trustee Company Ltd. and Motilal Oswal Asset Management Company Ltd.
Motilal Oswal Dynamic Fund (Div-A) - 12.7146Motilal Oswal Dynamic Fund (Div-Q) - 11.9099Motilal Oswal Dynamic Fund (G) - 13.5168Motilal Oswal Dynamic Fund-Dir (Div-A) - 12.9982Motilal Oswal Dynamic Fund-Dir (Div-Q) - 11.9025Motilal Oswal Dynamic Fund-Dir (G) - 14.1591Motilal Oswal Equity Hybrid Fund - Direct (G) - 12.2547Motilal Oswal Equity Hybrid Fund - Regular (G) - 11.8433Motilal Oswal Focused 25 Fund - Direct (D) - 18.3919Motilal Oswal Focused 25 Fund - Direct (G) - 26.7918Motilal Oswal Focused 25 Fund (D) - 16.6858Motilal Oswal Focused 25 Fund (G) - 24.2156Motilal Oswal Large and Midcap Fund - Dir (D) - 10.1891Motilal Oswal Large and Midcap Fund - Dir (G) - 10.1891Motilal Oswal Large and Midcap Fund (D) - 10.0057Motilal Oswal Large and Midcap Fund (G) - 10.0056Motilal Oswal Liquid Fund - Direct (Div-D) RI - 10.0077Motilal Oswal Liquid Fund - Direct (Div-F) RI - 10.0067Motilal Oswal Liquid Fund - Direct (Div-M) - 10.0579Motilal Oswal Liquid Fund - Direct (Div-Q) - 10.0312Motilal Oswal Liquid Fund - Direct (Div-W) RI - 10.0082Motilal Oswal Liquid Fund - Direct (G) - 10.9011Motilal Oswal Liquid Fund - Regular (Div-D) RI - 10.0055Motilal Oswal Liquid Fund - Regular (Div-F) RI - 10.0065Motilal Oswal Liquid Fund - Regular (Div-M) - 10.0565Motilal Oswal Liquid Fund - Regular (Div-Q) - 10.0301Motilal Oswal Liquid Fund - Regular (Div-W) RI - 10.0153Motilal Oswal Liquid Fund - Regular (G) - 10.8709Motilal Oswal Long Term Equity Fund (D) - 14.9755Motilal Oswal Long Term Equity Fund (G) - 16.9009Motilal Oswal Long Term Equity Fund -Dir (D) - 16.2743Motilal Oswal Long Term Equity Fund -Dir (G) - 18.2714Motilal Oswal Midcap 30 Fund (D) - 17.5734Motilal Oswal Midcap 30 Fund (G) - 24.5993Motilal Oswal Midcap 30 Fund-Dir (D) - 18.0697Motilal Oswal Midcap 30 Fund-Dir (G) - 26.7116Motilal Oswal Multi Asset Fund - Direct (G) - 10.1578Motilal Oswal Multi Asset Fund (G) - 10.1226Motilal Oswal Multicap 35 Fund (D) - 22.7061Motilal Oswal Multicap 35 Fund (G) - 25.7728Motilal Oswal Multicap 35 Fund-Dir(D) - 22.8082Motilal Oswal Multicap 35 Fund-Dir(G) - 27.4228Motilal Oswal Nasdaq 100 FOF - Direct (G) - 18.098Motilal Oswal Nasdaq 100 FOF - Regular (G) - 17.9604Motilal Oswal Nifty 50 Index Fund - Direct (G) - 9.7215Motilal Oswal Nifty 50 Index Fund (G) - 9.6886Motilal Oswal Nifty 500 Fund - Direct (G) - 10.8796Motilal Oswal Nifty 500 Fund (G) - 10.7994Motilal Oswal Nifty Bank Index Fund - Direct (G) - 8.7877Motilal Oswal Nifty Bank Index Fund (G) - 8.7234Motilal Oswal Nifty Midcap 150 Index Fund (G) - 11.4398Motilal Oswal Nifty Midcap 150 Index Fund-Dir (G) - 11.5246Motilal Oswal Nifty Next 50 Index Fund - Dir (G) - 9.4925Motilal Oswal Nifty Next 50 Index Fund (G) - 9.4408Motilal Oswal Nifty Smallcap 250 Index Fund (G) - 11.1975Motilal Oswal Nifty Smallcap 250 Index Fund-Dir(G) - 11.2811Motilal Oswal S&P 500 Index Fund - Direct (G) - 11.6321Motilal Oswal S&P 500 Index Fund (G) - 11.5915Motilal Oswal Ultra Short Term Fund - Dir (Div-D) - 9.7139Motilal Oswal Ultra Short Term Fund - Dir (Div-F) - 9.7322Motilal Oswal Ultra Short Term Fund - Dir (Div-M) - 9.7208Motilal Oswal Ultra Short Term Fund - Dir (Div-Q) - 9.8606Motilal Oswal Ultra Short Term Fund - Dir (Div-W) - 9.7247Motilal Oswal Ultra Short Term Fund - Dir (G) - 13.7638Motilal Oswal Ultra Short Term Fund (Div-D) - 9.7174Motilal Oswal Ultra Short Term Fund (Div-F) - 9.7278Motilal Oswal Ultra Short Term Fund (Div-M) - 9.7179Motilal Oswal Ultra Short Term Fund (Div-Q) - 9.8592Motilal Oswal Ultra Short Term Fund (Div-W) - 9.7209Motilal Oswal Ultra Short Term Fund (G) - 13.3841

These 6 Golden rules of asset allocation can help you build resilient investment portfolio

Blog Blog Details
  • September 29, 2020
  • Umang Thaker|
  • Head of Products

Well known studies by Brinson (1986,1991) concluded that "More than 90 percent of the variation in a portfolio s performance over time is due to its asset allocation". The studies further assert "… investment policy dominates investment strategy(market timing and security selection)." These findings have become the bedrock of financial planning discourses and have their fans and critics alike.           

Here are golden rules of asset allocation

1. Rules over Views:

Views are beliefs formed over time and involve predictions about markets. They are based on assumptions about future outcomes. These views differ depending on one’s ‘conditioning’ and may or may not hold true. However, an asset allocation plan based on ‘rules’ or some pre-determined scientific formula which uses actual parameters, is likely to triumph over views and market outlooks.

2. Understanding Behavioural biases: Investing is more behaviour than math

Investment decisions are driven by biases and not necessarily facts. Empirical theories assumed that investors were rational beings and made economically sound decisions based on data. However psychologists who studied investment behaviour, realised that investors make decisions based on biases and emotions. These decisions may or may not be prudent for their financial health. Hence a formula driven asset allocation eliminates the emotions and human biases out of the investing framework.

3. Low Correlation among Asset classes is important

Correlation means how two variables move together. If both variables rise or go down together, they are said to be positively correlated. If one variable does something and the other does the exact opposite, they are inversely correlated. And if there is no relation between the movements of two, they are low or not correlated.

Investing in asset classes which have low correlation or have negative correlation to each other spreads the risk. Over a long term period, such a portfolio will deliver better risk-adjusted returns.

4. Discipline – To Rebalance and alter weights systematically.

Bulk of the effort in choosing the right investment is centered on the ‘best returns’ generating instrument and very little effort directed towards risk, time horizon and goals. Since it is difficult to predict which asset class will perform and when – Asset Allocation is the best way to take care of this uncertainty. Asset Allocation must never be at the mercy of ‘last one year returns’. With regular rebalancing across asset classes one can maximize the benefits of asset allocation.

5. Risk Tolerance and not just Age :

Asset allocation based on age uses a thumb rule: 100 years - Current Age = % in Equity/Risk Assets. Well, this is very first-level thinking. It is based on the assumption that younger investors have longer time to make money and hence must allocate higher portion of their investable surplus to high risk assets. Asset allocation should be based on overall risk tolerance rather than age alone. Risk tolerance is the ability of an investor to tolerate uncertainty of returns. Risk tolerance is a combination of various factors such as one’s income, liabilities, number of dependents, financial goals, need for cash flows, savings, and age.

6. Taxation

Taxes are happy outcomes. In the obsession to avoid taxes – one may end up taking undue risks. Secondly investments done purely for avoidance of taxes may lead to sub-optimal outcomes. Optimising taxes rather than avoiding them should be the goal.

Investors would do well not to trivialise asset allocation to a percentage of equity/fixed income allocation. An informed discussion with your financial advisor can be a good first step. These Golden rules can serve as a guideline towards building resilient investment portfolios with the ultimate aim of helping investors achieve their financial goals.

Originally published in Money Control on 29th September, 2020

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