I got a good amount of one time money from one of family member who wanted it to be invested in direct stocks than mutual funds. The return expectation are moderate, ~12%-15%, but drawdown in case of adverse events is also expected to be low. The money needs to remain invested for 5-10 years.
Personally, like others on the forum, I have got good returns from growth oriented mid & small caps, over the past 10-12 years, for my family , I have gone into large caps.
The back testing has been done at a portfolio level, for one Nifty high to again when the same high has been touched post a correction ( Jan 2008 to Oct 2010; Oct 10 to Jan 13, March 15 to Jan 18, etc… Also when Nifty has crashed, say from Jan 2018 to March/April 2020 and similar instances in the past.
Barring last 15-16 months, the portfolio has seen consistent revenue and profit growth at a good RoE. The companies here have proven that the same can survive over business cycles ( at least short cycles so far ).
The purpose of portfolio is to take care education and marriage needs of kids in family. So, stability is more important than very high returns, However, the last 15+ years, the backtest, rolling returns have been in the range of 15%-30%, higher than minimum expectations.
The stocks are : ( from 12% of allocation to 5% in descending order)
- HDFC Bank
- Asian paints
- Bajaj Finance
- Kotak Mahindra Bank
- Honeywell Automation
- Reliance Industries
- Abbott Laboratories
- Hindustan Unilever
There is slightly high allocation in Financials ( 35%) and low in Technology. The bias has been towards historic consistency of revenue and profit growth than recent rise in price of Technology stocks. Also that financials & FMCG are currently out of favour so if market cycle changes, over 5-10 years , these can do somewhat better. Relative PEs may be higher but I am betting on these not going down much in case of a market crash.
Need your kind thoughts if this PF can get 12%-15% in future, compared to ~25% in the past.
My personal Portfolio is mid/small cap around consistently fast growing stocks that have been discussed to death on social media so will publish that separately.
Kindly opine. as this is for family and not me.