I have invested in 6 funds – Birla Sun Life Frontline Equity, HDFC Equity, IDFC Premier Equity, Reliance Regular Savings Equity, UTI Dividend Yield and ICICI Prudential Discovery. I have been investing in these funds since 2008 and intend to invest till 2020. Are there any changes required in my portfolio? I am a seasoned investor, but my funds have not given me returns as expected. Will the equity market perform better than other asset classes over the next few years, or should I look elsewhere?
-Navin
Considering that your investment horizon still has 8 years to go, we are sure there will be a time when the equity markets will scale up. However, we don’t blame you for being disappointed. The past 4-5 years have been a struggle for the equity markets, and they're still trying to regain the heights we had seen earlier. Not only that, we have been telling investors that equity proves to be the best performing asset class, but even regular equity investing hasn’t been able to beat fixed income. The problem with equity is that it proves to be erratic. If we look at the past 10 years, equity has done well, but most of the returns have come in 2004 and 2005. That was a time when the Sensex zoomed from 4,000 to 12,000, which came as a surprise. Hence, with equity, you have to be prepared to ride through the tough times, because things can turn around when you least expect it. We are hopeful that, despite the negative headwinds and political as well as economic concerns today, we will see good times in the coming years. The other reason why equity wins over other asset classes like fixed income is that it helps beat inflation more efficiently. So, be patient and continue investing.
This article was originally published on May 09, 2012.
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