The uncertainty in the markets is likely to continue in the near term on the back of global macro concerns, recession fears, weaker-than-expected earnings and the ongoing global banking crisis. Amid this backdrop, brokerage house Prabhudas Lilladher PMS believes 'multi-asset investing' is the way to go.
"Through last year’s market narratives of geopolitical uncertainties, high inflation, tight monetary policies, and slowing global growth – the underlying macro conditions gave us the conviction to identify one clear underlying investment approach: Multi-asset investing. Amidst elevated macro uncertainty, rising yields and the Russia-Ukraine war, a diversified yet dynamic allocation across asset classes in our multi-asset portfolio, our Multi-Asset Dynamic Portfolio (MADP) preserved the capital when capital protection was the need of the hour," said the brokerage.
It further pointed out that through this phase, MADP has continued to deliver on its core promise of consistency, low volatility, and sustainable outperformance, helping investors navigate the dynamic market landscape.
Multi-Asset Dynamic Portfolio is Prabhudas Lilladher's quant-based tactical asset allocation PMS strategy that dynamically invests in passive instruments across domestic equities, fixed income, commodities, alternates and international equities.
In the last one year, Prabhudas Lilladher's MADP has given 10 percent returns to its investors. Meanwhile, it is up 3.2 percent in the last 3 months.
As per the brokerage, over the last one year, its MADP's performance can be attributed to having a lower allocation to equities as the markets entered the correction period of May and June 2022.
"Although we missed some of the market rally post-June, we covered the underperformance by going overweight on Gold as we approached November," it informed.
The brokerage noted that gold outshined all other asset classes and continues to show good performance.
It further informed that in the new year, the brokerage increased its allocation in international equities from 6 percent in November 2022 to 11 percent by January 2023.
"The underperformers of 2022 – US and international equities – started the year with a bang, recovering 50 percent of last year's losses in the first 3 months of the new year," it informed.
It also increased its allocation in long-duration Gilt funds from 2.8 percent to 7 percent as the pace of rate hikes slowed.
Then towards the start of April, the brokerage marginally increased position in domestic equities due to fair valuations and improving macros.
Amidst the changing market narratives and one of the most challenging and interesting years from an investor's perspective, MADP has demonstrated resilience in terms of performance, added the brokerage.