Spiderman, Iron Man, and Thor – each have unique superpowers, but they all have some limitations. However, when they come together as Avengers, they are much strong and almost unbeatable – even the best villains have less chance of beating them. If you get the concept of Avengers, understanding multi-asset investing should be a cakewalk for you.
In stock investing, every sub-class has a unique advantage and some limitations. But when you combine them together, they become more effective. It enables investors to manage risk more efficiently and generate higher returns. In this article, we will discuss the concept in detail.
Understanding multi-asset investing
Multi-asset investing is investing in different assets such as equity, debt, gold, private equity, real estate, etc. We will keep our discussion limited to equity, debt, and gold – these are something most investors target.
You may have understood that you need to invest in a different asset. However, most investors fail to understand how much to allocate in different asset classes. The exposure to each asset class in your portfolio will depend on your risk profile, financial goals, and investment horizon. A stock advisory company can help you with all the above and help you create multi-asset investing.
When you create a portfolio with proper asset allocation, you have a diversified portfolio that reduces risks and helps you achieve your financial goals in time.
How to implement multi-asset investing?
Let us understand what we mean by multi-asset by taking equity example. Assume you decide to invest in equities. However, randomly picking quality stocks will not be a good strategy. Within equity, you can implement a multi-asset strategy as below:
- Market caps: You can have stocks from different market caps – smallcap, midcap and large-cap. The allocation to each will mainly depend on your risk profile. If you are a conservative or moderate investor, you need to have limited exposure to small and mid-cap stocks as they are volatile. When you have all three in your portfolio, the risk associated with equity investment significantly comes down.
- Sectors: There are thousands of stocks listed in the market and spread across different sectors. The sectors include Pharma, Financials, Banks, FMCG, IT, etc. You also need to ensure that your stocks are from different sectors. Some sectors are cyclic. If you keep stocks from only that sector, you may not make good money in the long run.
- Geography: Stock portfolio management is complicated because diversification does not end here. Best stock advisory companies will tell you to take a step further in diversification and invest across geographies. Indian investors can explore other markets and invest in them according to their risk capability.
Along with equities, you can also have allocation in debt funds and gold. However, if you are young, you can have limited exposure to these categories (unless there are not many entry points in the equity market).
Benefits of multi-asset investing
Below are some advantages of multi-asset investing:
- Diversification: By definition, multi-asset investing promote diversification. It enables investors to diversify their portfolios and reduce concentration or over-dependence on a single asset class. Therefore, the underperformance or volatility of a single asset class does not impact your portfolio health.
- Risk-adjusted returns: The strategy reduces the risk and protects returns. Your portfolio has the potential to generate better risk-adjusted returns in the long term.
- Dynamic: These strategies are dynamic. The rebalancing ensures that your investment is made in the right asset class at the right time. You exit equity when the market is high and invest in debt to later return to equity when the market is better value.
- Long-term stability: By reducing your portfolio risk, your portfolio enjoys better stability in the long term.
How does Jarvis help with multi-asset investing?
Stock portfolio management is not an easy task – it requires expertise. The first step is creating a balanced portfolio – a mix of equity, gold, and debt. Jarvis Invest is AI-driven investing tool to help you create an ideal portfolio per your risk profile and investment horizon.
Once you register with Jarvis, it creates a personalized portfolio for you. The allocation percentage will depend on many factors. Not only this, Jarvis continuously monitors your portfolio, and in case of any rebalancing (or exit), it will notify you. Jarvis is unlike other advisors who only focus on equity – Jarvis helps you with your complete investment portfolio – equity, debt, and gold. You can download the app and get started with your investment.
P.S. – Multi-asset investing is not an option but a need for every investor.