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Children’s Day Special: How to create a crorepati portfolio for your GenNext

The earlier you start, the easier it is, Sunil Singhania, Founder, Abakkus Asset Manager.

, ETMarkets.com|
Nov 14, 2019, 01.17 PM IST
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On an average, midcap mutual funds generated an average of 14 per cent returns annually in last 10 years.
Systematic investment as well as starting early is the key to wealth creation for any market participant.

This Children’s Day, for those planning to create a portfolio for your children for the next 10-15 years, analysts’ advice is to stay put with mutual funds through the systematic investment plan (SIP) route or focus on goal-based investing.

Parents should go for goal-based investing, if they want to generate a particular corpus for kid’s education etc. The earlier you start, the easier it is, Sunil Singhania, Founder, Abakkus Asset Manager, told ETMarkets.com.

“In the near term, equity might seem volatile. However, we have seen in the past, that equity is the only asset class that can generate 12-15 per cent CAGR return in the long run. SIP is the best way to accumulate wealth for parents who have time in their side,” he said.

At present, BSE benchmark Sensex and its NSE peer Nifty are hovering at record high levels, despite a heavy selloff in the broader market. The 30-share Sensex scaled a record high of 40,749 on November 8 this year on account of buying in select stocks, while the BSE Midcap and Smallcap indices have declined 17 per cent and 30 per cent, respectively, since January 1, 2018.

Value investor Safir Anand advises parents to go with SIP in mutual funds. “In case of mutual funds, you can invest 50 per cent each in largecaps and midcaps. In case of direct equity, the financial space looks good as credit growth is inevitable. I also like select IT stocks, as the currency equation should turn favourable, which will also help some domestic pharma giants where valuations look good,” said Anand.

On an average, midcap mutual funds generated an average of 14 per cent returns annually in last 10 years. Technology, pharma, smallcap and banking sector-oriented funds delivered 13.37 per cent, 12.87 per cent, 12.10 per cent and 9.43 per cent, CAGR returns respectively, during this period, data available with Value Research showed.

Credit growth picked up since September, jumping by Rs 1.08 lakh crore, which was aided by housing, NBFC and lately MSME stocks, showed a study by State Bank of India.

To add to the above commentaries, Jharna Agarwal, Head of Anand Rathi Preferred, said when building a new portfolio for your young child, the biggest advantage you have on your side is time and you should make the most of it.

“Since you are looking to invest for 10-15 years, you can allocate money into equities to ensure that your portfolio beats the inflation in the cost of higher education that we face. Choose proven largecap and large-midcap funds to form the core of the portfolio. Stay away from the various child insurance plans as they inadvertently give sub-optimal returns,” she said.

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