scorecardresearchCurated stock portfolio baskets can offer returns as high as 120 percent but can backfire

Curated stock portfolio baskets can offer returns as high as 120 percent but can backfire

Updated: 21 Apr 2022, 05:11 PM IST
TL;DR.

We elucidate the key benefits of buying a strategic mix of stocks regularly assessed by fund managers. Read further to know more 

There are several reasons for the high returns posted by curated stocks portfolios. One is stock picking, while other reasons are portfolio concentration, swifter portfolio changes and high risk taking.

There are several reasons for the high returns posted by curated stocks portfolios. One is stock picking, while other reasons are portfolio concentration, swifter portfolio changes and high risk taking.

When stock markets start to perform well, investors tend to explore numerous options of investment — ranging from mutual funds to curated stock baskets. It’s interesting to know that these stock baskets are different from other diversified and well-managed mix of stocks such as mutual funds and portfolio management service (PMS).

While mutual funds require a minimum investment of only 500, PMS calls for an entry level threshold of 50 lakh. On the other hand, curated stock basket is a pre­designed basket of stocks regularly assessed and tweaked by an expert and buy/sell orders are transacted on broker platform.

High returns

One of the key reasons of investing in well curated baskets is high returns. Some investors have received returns which are as high as 70-140 percent in the last one year. When compared to the returns posted by equity mutual funds across categories; this return, undoubtedly, is exceptionally high.

If one scans through the top gainers of last one year on small case platform, one would be appalled to see exceptionally high returns — as high as 121 percent for a portfolio known as ‘Green Energy’. A similar one called Flagship Multi Factor Strategy posted a return of 120 percent in one year, Omni Capital Enablers posted a high return of 87.6 percent.

Top Gainers of last year

Curated stock baskets Return (%)
Green Energy121.55
Flagship Multi-factor Strategy120
Taare Zameen Par       92.4
Omni Capital Enablers87.62
Multiplier82.95

(Source: Small Case)

 

There are several reasons for the high returns posted by curated stocks portfolios. One is stock picking, while other reasons are portfolio concentration, swifter portfolio changes and high risk taking.

On the other hand, actively managed mutual funds which are supposed to deliver high returns are constrained by capping on sectors/stocks and small liquid investment universe.

How it works

The good fund managers usually run their own investment firms. The curated stock portfolios enable small investors to get access to the stock baskets designed by these fund managers.

Curated stock platforms such as WealthDesk and Smallcase provide technology infrastructure to invest directly in the portfolios curated by these firms.

For instance, on WealthDesk, one can invest in stock baskets of Quantech Capital, Lotusdew, Rupeeting, Tamohara, Renaissance Investment Managers, Aditya Birla Money, Abakkus Investment Advisrors, among others.

However, it is important to note that the minimum amount of investment is far more than 500, as required in a mutual fund. For instance, in case of Green Energy (in Small Case), the minimum threshold is 55,122, for Flagship multi-factor strategy, this cap is set at 1,04,360, for Omni Capital Enablers, this amount is 18,018, for multiplier, it is 44,103, so on and so forth.

Likewise, the minimum amount required to invest in HighWall (at Wealthdesk) is 5 lakh; for Rocketship, it is 2 lakh; for Champion Wealthbasket, the minimum threshold is 1.18 lakh; and for Pearl Focus, the smallest investment required is 2.5 lakh.

Experts, however, advise that these curated stock portfolios may not be ideal for small investors.

“Curated stock portfolios are more focused and concentrated and give exposure to even a particular corporate group; whereas mutual funds are relatively broader and provide exposure to sectors and indices. Also, buying and selling these curated portfolios turn out to be more expensive. Another point of distinction is that these stock portfolios – being focused – are high on risk as well as on reward. So, they may not be ideal for investors who have a small corpus to play with,” says Amol Joshi, Founder of PlanRupee Investment Services.

 

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First Published: 21 Apr 2022, 07:59 AM IST