A clear pattern is visible in market behaviour since Covid. Post covid, markets did very well for 18 months from Apr 20 till Sep 21, then went into a consolidation phase for 18 months till Mar 23. What followed was an 18 month bull market till Sep 24 and now we are in the 17thmonth of what may well turn out to be another 18 month consolidation phase – which, if the pattern is to repeat, should last until Mar 26.
The stage is set for market to emerge out of this consolidation phase with fiscal deficit and inflation under control, valuations now looking more reasonable and earnings growth projected to come back into early teens.
Large caps can continue outperforming over the next few quarters.
Value has outperformed quality/growth over the last 5 years. Going forward, Vishal expects quality/growth to start outperforming as broad based earnings growth picks up momentum.
Focused funds (concentrated portfolios) at a category level appear to have performed in line or marginally below flexicap funds category – but the wide dispersion in performance across focused funds tells you that while alpha potential in concentrated portfolios is clearly there, risks of poor stock selection are equally in play.
Protecting portfolios against sharp drawdowns is what most investors aspire for. While the new SIF category promises efforts in this direction through long-short strategies, the same strategies also tend to limit upside participation.
Vishal says the best protection against sharp drawdowns is to widen your investment horizon. Longer you stay invested, smoother are your investment journeys.