Need Review and Guidance for my Invest and Forget Portfolio

Q&A: Questions & Answers Portfolio Q&A
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I have been an investor for years and have been trying multiple strategies, and most of them work perfectly for me (even in down cycles), but I also always wanted something that is ‘Invest and Forget’.
We can debate over this, but I think in the current scenario, you can’t invest and forget with selective stock investing.

Then what are the options? Mutual Fund Investing?

We all know that there are two types of mutual funds, Active and Passive.
From what I have experienced, Active mutual funds outperform in short duration, but most of them fail to beat the benchmark in a wider view, and there is also a risk of the Fund Manager leaving the fund (happening a lot now and I think it will only increase with time), with change in Fund Manager, you can’t really expect to get the same result as earlier.

Now we are left with Passive Mutual Fund Investing, but I will anyday prefer investing in ETFs over Passive Mutual Funds.

Why?
ETFs allow you to invest at any point in time; there is no cutoff time, and you can also play with intraday volatality, there have been numerous examples in the past 2-3 years where it was always a wise choice to invest in an ETF rather than passive mutual fund.
Also, ETFs generally have a low expense ratio, and I think ETF culture will boom in India in the coming years (same as US)

Now, since I had made my decision to go ahead with an ETF portfolio, it was time to find the ETFs and their allocation/weightage.

After trying multiple ETFs and their allocations, researching over 100s of Indexes and over 250 ETFs, I came up with this split:

ETF Name Ticker Weight (%) Segment Segment %
Zerodha Silver ETF SILVERCASE 3 Hedge - Commodities 10
Zerodha Gold ETF GOLDCASE 7 Hedge - Commodities
Kotak Nifty 100 Equal Weight ETF NIFTY100EW 10 Equity - Largecap 35
Kotak Nifty Alpha 50 ETF ALPHAETF 12.5 Equity - Largecap
Motilal Oswal BSE Enhanced Value ETF MOVALUE 12.5 Equity - Largecap
Mirae Asset Nifty Midcap 150 ETF MIDCAPETF 15 Equity - Midcap 35
Motilal Oswal Nifty Midcap 150 Momentum 50 ETF MOMIDMTM 20 Equity - Midcap
Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF SMALLCAP 20 Equity - Smallcap 20

Please note that I have changed the weights multiple times, and I am still trying different allocation % to find the perfect fit.

This is the Indian Market split. For the US, I like to keep it very simple, so I prefer to invest in this split:

Indian Market + Commodities: 70%
US Market: 30%

Note: Instead of the US market, this 30% allocation is actually for world market, but I am yet to explore ex-US options.

ETF Name Ticker Weight (%) Segment Segment %
Roundhill Magnificent Seven ETF MAGS 10 Equity - US 30
Invesco NASDAQ 100 ETF QQQM 20 Equity - US

I could have stuck to the normal Broad Market Index, but I also included Strategy Indexes as they have always outperformed the broad market index in the long run, obviously in the down-cycles, the drawdowns would be drastic for strategy indexes, but since we are going for Invest and Forget, it really doesn’t matter that much.

I have not included any sectoral or thematic indexes as all of them have cycles, and I really don’t find any that I would like to stick to 20-30 years, max I could stick to 5-7 years.

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I have found simplicity to be a better investment strategy.

A decent fund manager operating a flexicap fund should be able to make these asset allocation decisions on the investors behalf. There are managers who have achieved 19-20% over 10 years.

I believe that would save a lot of time and effort, which can be better utilized for more productive and fulfilling activities.

Sorry if the answer seems to be a letdown, but just sharing my actual thoughts.

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I agree on this but I have already addressed this issue in the post that fund managers not sticking to a fund now-a-days for a very long period of time and you can’t expect good or same result from different fund managers.

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(post deleted by author)

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I don’t think so people like Rajeev thakkar, Samir Arora, Kenneth Andrade are going anywhere.

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Consider a true global ETF for part of the US allocation; this is very concentrated in US mega-cap tech. If regulation or an AI bubble or taxation hits big tech, US market may be flat, but
Your US portfolio may fall 40%+

Not saying change it, just

Instead of: 30% QQQM + MAGS

Maybe: 15% QQQM + 10% S&P 500 / MSCI World + 5% MAGS

Apart from that, I would suggest what I do in my portfolio, which you can do: if any ETF deviates by ±25% from target weight, rebalance early (I learned it the hard way in this bear phase) because it prevents momentum ETFs from becoming 40–50% of the portfolio after bull runs.

Second, is If an ETF underperforms its parent index by >5% CAGR over 5 years, then replace it.

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There are some exceptions like ppfas but like you mentioned Sameer arora, he do not manage most of the helios funds and no matter how good the fund manager is, they have cycles in which they beat markets and then followed by cycles in which they underperform as thier picking style doesn’t work.
Take example of quant, motilal, etc, they were darlings of mutual funds market at one point but now heavily underperforming.
So why to even take risk, give more expense ratio, when you can perform better with index funds.

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Agreed, I am yet to explore world options.

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5% cagr difference over 5 years is a big delta over long term…why would an etf tracing an index end up in such large deviation over such long term and that too consistently? Short term deviations may be happening though..

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My observation is that, whether you invest in Active Fund or Passive Fund, you need to stay during lean periods and keep patience. The same under performing fund may out perform after 1-2 years, as under performance some times could be some stocks in the portfolio being underperforming and they can turn around after few years.

Better strategy is to stay away from funds which are in the lime light and focus on Management Quality, Low Expense Ratio and the process of investment. This strategy is generally sufficient to generate satisfactory returns over longer periods, say 5+ years.

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