Our experience tells us that getting sector allocation right is a big factor that determines medium term return. While the bulk of the investing community is focused on bottom up stock analysis, experienced investors appreciate that optimum sector allocation allows one to optimize the portfolio return across timeframes.
In India bottom up stock research gets all the attention but portfolio management doesn’t get the attention it deserves, barring bear market runs that expose the fragilities of a poorly constructed portfolio. Effective portfolio management comes down to understanding many factors well – allocation across market capitalization, active sector allocation, playing sector rotation right and position sizing.
At any point of time, investors need to have a top down view of the macroeconomic context governing various sectors and have an informed view about how the competitive structure is evolving in each sector. Through these series of sector reports, we attempt to provide the much needed top down structure to retail portfolios.
The consumer discretionary sector in India has historically been a consistent wealth creator for long-term investors. Over the last decade, it enjoyed strong tailwinds driven by rising incomes, premiumization, and limited listed investment options. We have been tracking the consumer discretionary sector in India for more than a decade now and have observed how the…
The Indian building materials sector has been a consistent wealth creator for equity investors over the past 15 years. Multiple segments within the sector such as tiles, sanitary ware, pipes, paints, plywood, and MDF benefited from strong housing demand, rising formalization and expanding distribution networks. However, over the last two to three years, sector growth…