Thematic investing for 15+ years

Q&A: Questions & Answers Portfolio Q&A
1

I was reworking my portfolio and shifting from 100% MF to 65% ETFs + 35% individual stocks. Individual stocks to be selected basis specific themes I believe to be in play for the next 15 years. Within the individual themes, would be limiting my investment to the top 1 or 2 companies in that sector. Would be helpful to get your opinions on:

  • a) Themes – do they make sense?
  • b) Individual companies in the respective themes (with preference of B2B than B2C companies)–

Themes (and top companies):

1) Urban Infra
a. Public Transportation

  • L&T
  • Adani Enterprises (due to Adani Airports)

b. Commercial Real Estate

  • Mindspace REITs
  • Embassy REITs

2) Social infra
a. Water infra

  • Not available

b. Waste disposal/ Sewage/ Pollution control

  • Not available

3) Solar Energy

  • Adani Enterprises (due to Adani Solar mfg)
  • Borosil Renewables (to be replaced by Vikram Solar as and when available)

4) Logistics

  • Bluedart
  • Adani SEZ

5) Retail

  • Avenue
  • V-mart

6) Capital Goods

  • Johnson Hitachi (well positioned for the PLI scheme)
  • Havells

7) Electric Vehicles

  • Hero Motor Corp
  • Exide batteries
  • Tata Elxsi

8) Healthcare

  • Lal Path labs
  • Thyrocare

9) Agri tech

  • Not available

Other information:
a) ETF distribution:

  • a. 20% NIFTY 50
  • b. 20% Nifty Next 50
  • c. 10% Nifty Mid Cap 150
  • d. 10% SmallCap 50
  • e. 5% Nasdaq 100

b) Not an active investor. Max quarterly rebalancing. Looking at an investment horizon of 15-20 years.

c) Will invest in stocks over the next 6 months. ETFs will continue as SIPs

1 Like
2

Suggestions for the Not Available ones
AgriTech: Bayer Crop Science, Bharat Rasayan(Insecticide & Herbicide play)
Capital Goods: Why not Include Whirlpool too?
Sewage: Ion Exchange, they have been very good at waste water management

3

This seems a great idea & good potential long term thematic play.

However, if we consider that you end up investing in all your 11 themes with even 2 stocks each, you end up getting 22 stocks. in the 35% of your portfolio. As you already have substantial diversification due to ETF investing in all varieties.

This may lead to market returns eventually for the overall 100% which you are already getting at from your 65% ETFs portion.

Instead, you can choose fewer themes & stocks to increase the probability of higher returns from the 35% of stocks which I assume can be carefully chosen with decent allocation since you have a 15+ years horizon. So that you get better return than market. (Which I am assuming is your goal of moving 35% pf into stocks from ETFs).

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Hope this helps you decide better for yourself.

2 Likes
4

thanks Rishu. Good reminder. We need to to remind each more often.

5

by the way, why do you prefer Index ETFs. ??
why avoiding non Index ETFs??
Why not DLF in place of REITs ??

And yes, your planning is interesting :slight_smile:

6

I think you should reduce the duration to 5 years and in 15 years some sectors will not perform better or their performance will be average.

7

For water infra, you can look at Jash Engineering … (not a recommendation, but a player in this space)