Equities and gold shine in FY 2023: What should be your portfolio strategy for FY 2024?

Equity investors cheered the banal marketplace rally successful the Financial Year 2023 and made fantabulous returns. With 2 wars waged and ostentation slowing astatine a lower-than-expected pace, golden besides sparkled and made bully wealth for investors successful FY 2023. With involvement rates astatine decadal highs, fixed-income investors had an accidental to fastener into the precocious involvement rates for the adjacent fewer years.

Finally, real estate besides made a comeback aft lying debased for the past fewer years. In a uncommon instance, each 4 plus classes did good successful the FY 2023. Let america sermon the show of these plus classes successful FY 2023, and what should beryllium your portfolio strategy for FY 2024.

Equities

Domestic and planetary equities had a stellar tally successful FY 2023. The returns from home equities were arsenic follows.

(Source: https://www.niftyindices.com)

The supra array shows however the ample caps gave bully returns of 28.61% (Nifty 50) and 60.39% (Nifty Next 50). However, the broader markets outperformed the ample caps. The Nifty Microcap 250 Index was the champion performer, with a stellar 85.12% return.

Among the sectoral indices, the Nifty Realty Index was the champion performer, with a instrumentality of 132.52%. The existent property stocks did good connected the backmost of bully sales, little inventory, amended realisations, caller task launches, little debt, etc. The 2nd best-performing assemblage was auto, with the Nifty Auto Index zooming up with 74.94% returns.

Along with India, the US equity markets besides rallied. The returns of the 3 large US indices were arsenic follows.

(Source: Motilal Oswal Mutual Fund)

Note: The supra returns are successful US Dollar terms.

The tech-heavy NASDAQ led the rally with 38.49% returns, portion the broader S&P 500 Index followed with 27.86% returns.

What should you bash successful FY 2024?

In FY 2023, we saw however the home marketplace gave fantabulous returns, with mid and tiny caps leading the charge. A repetition of a akin show is highly unlikely. In FY 2024, you should rebalance your equity portfolio. Due to the outperformance of mid and tiny caps, their weightage indispensable person increased. So, portion doing portfolio rebalancing, you whitethorn trim the vulnerability to mid and tiny caps and summation allocation to ample caps.

The valuation of ample caps is tenable compared to the higher valuation of mid and tiny caps. Hence, that whitethorn further warrant an summation successful the weightage of ample caps compared to mid and tiny caps. Events similar elections (in India, the US, and galore different economies), precocious lipid prices, precocious involvement rates, hazard of Israel – Hamas warfare spreading, etc., tin pb to precocious volatility and short-term correction. Hence, you should follow a cautious approach. It is recommended to put successful equity communal funds done SIP alternatively than lumpsum.

Fixed income

In the past mates of months, immoderate banks person accrued the involvement rates connected their fixed deposits. Similarly, NBFCs and corporates are offering higher yields connected bonds. The yields connected Government bonds person besides gone up. As of 12th April 2024, the output connected the Indian 10-year G-sec closed astatine 7.179%. With US ostentation rising to 3.5% successful March (compared to 3.2% successful February and 3.1% successful January), the hopes of involvement complaint cuts person decreased. As of 12th April 2024, the US 10-year treasury enslaved yields person climbed to 4.518%.

Investors tin usage this accidental to payment from the existent precocious yields. If you are looking to put successful fixed deposits, you tin fastener into the existent precocious involvement rates for FY 2024 and the adjacent mates of years.

Similarly, you tin put successful indebtedness communal funds. You volition payment from the existent precocious accruals. In future, whenever involvement rates are cut, determination is simply a imaginable for superior gains. Indian G-secs volition beryllium included successful planetary enslaved indices successful FY 2024. Starting June 2024, Indian G-secs volition beryllium included successful JP Morgan's Government Bond Index. It volition beryllium followed by the inclusion of India G-secs successful the Bloomberg Emerging Market (EM) Local Currency Government Index successful January 2025. These events person the imaginable to thrust down yields.

Interest rates and enslaved prices person an inverse relationship. Whenever the RBI cuts involvement rates, the enslaved prices volition rally. An summation successful enslaved prices volition pb to an summation successful indebtedness money NAVs, starring to superior gains for you.

Gold

In FY 2023, golden gave bully returns of 12%. In FY 2024, golden has already had a bully start. From 1st to 12th April 2024, the golden prices person rallied from Rs. 69,471 to Rs. 73,834. The golden prices consistently deed all-time highs successful April 2024 and amusement nary signs of cooling off.

Certain events successful FY 2024 tin support golden prices astatine elevated levels. Some of these events include:

1) High buying from cardinal banks similar China and others.

2) Risk of Israel – Hamas struggle extending to Iran and different countries successful the Middle East.

3) High crude lipid prices, with brent crude going supra $90 per barrel. High crude lipid and different commodity prices tin stoke ostentation further.

4) Risk of recession successful bigger economies, etc.

Along with gold, metallic prices person precocious had a bully run. Besides being a precious metal, metallic has a batch of concern applications that are lone expanding arsenic we determination ahead.

To payment from the continued uptrend successful golden and metallic prices successful FY 2024, you whitethorn allocate 10-15% of your portfolio to precious metals.

Asset allocation for FY 2024

It is recommended that you travel plus allocation, which includes diversifying your portfolio crossed plus classes similar equity, debt, gold, etc. The allocation to assorted plus classes tin beryllium connected your age, hazard profile, concern clip horizon, etc.

If you are young, person a higher hazard appetite and are investing for semipermanent fiscal goals, you whitethorn marque a higher allocation towards equities. Within equities, successful the adjacent term, you whitethorn support a higher allocation towards ample caps. As mid and tiny caps person rallied a batch successful the past year, you whitethorn support a little allocation towards them. 

You whitethorn allocate 10-15% each towards precious metals (gold and silver) and fixed income. Different plus classes instrumentality turns to outperform each different implicit the years. Appropriate plus allocation volition assistance you payment from the outperformance of each plus class. Asset allocation tin assistance you gain amended risk-adjusted returns.

Gopal Gidwani is simply a freelance idiosyncratic concern contented writer with 15+ years of experience. He tin beryllium reached astatine LinkedIn.

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Published: 23 Apr 2024, 11:33 AM IST