Can Curated Portfolio Baskets Be An Alternative To Mutual Funds?
The most popular investment vehicle globally is perhaps the mutual fund. However, investing in mutual funds usually happens because investors think it is a popular trend requiring minimal research and time. Why should investors limit investments to mutual funds if better investment products are available?
Retail investors following experienced market experts are no longer limiting themselves to mutual fund investing. Many are deciding to invest their funds in carefully curated portfolios.
SEBI-registered investment advisors (RIAs) and new-age money managers are democratising wealth management by adding alternative investments to curated portfolio baskets. These are values-accretive, low-risk investments. While keeping mutual funds, you can add alternative investments to your curated portfolio basket to counter some of the negatives of mutual funds.
What Is A Curated Portfolio Basket?
A curated portfolio basket is a blend of mutual funds and portfolio management services (PMS) designed by investment experts. It aims to provide a diversified investment strategy by selecting equity, debt, and gold, often based on specific themes, strategies, or asset allocations.
While offering high returns, investors need to be aware of the associated costs, like brokerage and maintenance fees, and the lack of a regulatory framework which might entail higher risks.
The benefits of a portfolio basket are:
- Simplified investing
- Diversification across various assets within the chosen theme
- Managed by investment experts
It aims to align with investor goals, risk tolerance, and market trends, offering a well-defined path to optimised returns.
How To Invest In Curated Portfolio Baskets
You can start by researching online platforms that offer these investment options keeping in mind the following pointers:
- Look for platforms with a good track record, clear investment strategies, and cost transparency.
- Consider platforms that allow access to expert-created baskets, focusing on sectors or themes you are interested in.
- Reviewing the performance, risk profile, and fees associated with the basket is crucial.
- Once you have chosen a platform and a basket, you can invest directly through the platform's website or app, following their registration and investment process.
Investment Theme Of Curated Portfolio Basket
The theme of a curated portfolio basket investment typically revolves around diversification across various sectors, risk management, and capitalising on market opportunities. New-age curated portfolio basket creators are adding low-risk alternative investments as a new asset allocation.
These portfolios are designed to align with investors' specific investment goals, risk tolerance, and time horizons. They focus on themes like technology, healthcare, consumer goods, and emerging markets. The objective is to offer investors a strategic blend of assets selected by experts to optimise risk and reward.
How Portfolio Basket Works?
A portfolio basket works by grouping selected stocks, ETFs, or other securities, curated based on specific investment themes or strategies. Investors can buy into this pre-selected collection of potentially high-risk, moderate-risk, and low-risk products as a single investment.
How Can Alternative Investment Lower The Risk Of Portfolio Basket?
Incorporating alternative investments into a portfolio basket can reduce risk through diversification beyond traditional stocks and bonds. These alternatives, like securitised debt instruments (SDIs), fractional commercial real estate (FCRE), commodities, private equity, and hedge funds, have a low correlation with the stock market.
Due to their non-market-linked nature, they can perform differently under market conditions that negatively affect traditional investments, potentially stabilising or increasing the portfolio's value during downturns. By spreading investments across various asset classes, investors can mitigate the impact of market volatility on their portfolios.
How Can Alternative Investment Be Good For Better Returns Compared To Mutual Funds?
When mutual funds are compared to alternative investments, the latter generates better returns. For example, short-term, low-investment asset leasing (LeaseX), and inventory financing (InvoiceX).
These investment tools can make your portfolio generate predictable fixed monthly returns. When you compare the two products with mutual funds, these short-term returns add greater value to the investment. In 1-36 months, you earn up to 14% pre-tax IRR.
Alternative Investment Vs. Mutual Funds
Which One To Choose And Why?
Mutual funds and alternative investments have their fair share of pros and cons. Ultimately, the choice depends on your investment goals, risk appetite, and investment horizon. Mutual fund investing allows you to access a diversified portfolio with limited capital. Meanwhile, alternative investments can provide a steady income stream through regular interest payments. Thus, it can be an attractive investment choice for investors looking for diversification and passive income.
Are you interested in trying out the lucrative approach to earning fixed returns? Grip Invest provides investment opportunities in rated, listed, and regulated alternative investments with fixed returns.
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