Portfolio management: Amid a volatile and uncertain stock market, investors are busy finding alternatives to keep their portfolios in the green. Unveiling the strategy to one’s portfolio in the positive terrain, JioBlackRock MD-CEO Sid Swaminathan said that one should diversify one’s portfolio and allocate funds to all assets. He said that globally, investors are allocating 3% to 5% of their portfolios to virtual assets. The University of Illinois Urbana-Champaign alumnus said that diversification of the portfolio is a must; gains in one asset pare the losses incurred in other assets.
Why should you allocate funds to virtual assets?
Speaking on the reason for diversification of portfolio, Sid Swaminathan said, “The equity market is expected to remain uncertain due to various developments like soaring crude oil prices, geopolitical tensions, soaring US Treasury Yields, strong US dollar, etc. In such a condition, there is complete uncertainty in global merchandise markets, as the triggers dragging down equity markets are interlinked. In such a scenario, one should look at all those assets that benefit from the market uncertainty. Since virtual assets are one of those beneficiaries, people are allocating funds to virtual assets as well.”
One should note that virtual assets don’t refer only to cryptocurrency. Virtual assets include Non-Fungible Tokens (NFTs), Utility and Governance Tokens, and Tokenised Real-World Assets (Security Tokens).
However, he maintained that the Indian stock market has already taken a heavy beating and, hence, the chances of further downside are limited. But, he also maintained that a limited downside doesn’t mean an opportunity for the investment landscape. He said that upside in the equities will also be limited.
How much funding should you allocate to virtual assets?
On how much exposure one should have in the virtual assets, Sid Swaminathan said, “The global practice suggests 3% to 5% fund allocation into the virtual assets.”
However, the JioBlackRock MD-CEO maintain that he is talking about the global practice. An investor should not assume that he is advising any investor to follow the same investment pattern.
Asked about the reason for launching an NFO for its balanced advanced fund, which is a highly risky asset, Sid Swaminathan said, “We have our Aladdin (Asset, Liability, Debt, and Derivative Investment Network) Platform. It is a data-driven platform that gathers all information on a select number of stocks we have added. It enables us to generate alpha return, beating the index return by a decent margin. This margin can be bigger if the time horizon of the investor is long.”
Disclaimer: This story is for educational and informational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified financial experts before making any investment decisions.