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While planning one’s investment portfolio, one can take inspiration from the Laxmi pooja thali which contains various symbolic elements, each playing a vital role in the pooja ritual.
Just like the diverse elements of the pooja thali, the multi-asset fund also consists of various elements such as equity, debt, gold, along with cash that makes it a complete menu.
Authored by Suresh Soni:
If there is one festival that is celebrated by the largest number of Indians it’s Diwali, the festival of lights. It’s a time of celebration and joy where families reunite and share bonhomie and one meets relatives whom one has not met since a long time and friends party together. We clean and decorate our houses and dress up in traditional new clothes. Central to the festivities is the Laxmi pooja where we worship Goddess Lakshmi to bring wealth and prosperity. While we worship the Goddess Lakshmi, we understand the importance of Karma. To achieve wealth, we must also work hard and make wise investments.
While planning one’s investment portfolio, one can take inspiration from the Laxmi pooja thali which contains various symbolic elements, each playing a vital role in the pooja ritual. Just as each component of the pooja thali has a distinct purpose in completion of the ritual, the various asset classes in a multi-asset fund come together to form a well-rounded investment portfolio. Just like the diverse elements of the pooja thali, the multi-asset fund also consists of various elements such as equity, debt, gold, along with cash that makes it a complete menu.
Diyas (Lamps): The Light of Equity
The first and most crucial component of the pooja thali is the diya. A diya symbolises the dispelling of darkness and brings hope, and clarity. It’s the guiding light that illuminates the entire ritual. In the context of a multi-asset fund, equity investments play a similar role. Equities are typically the growth engine of a portfolio, providing long-term capital appreciation.
Like the diya lighting up the room, equities help illuminate the path to growth by offering higher returns over the long term. While they carry a certain level of risk due to market volatility, their potential to generate wealth makes them indispensable in a well-balanced portfolio. Innumerable studies have shown that over the long term, equities in India have always given a positive investor experience and are the asset class with the highest long-term returns.
Flowers: The Fragrance of Debt Instruments
Flowers are another vital component of the Laxmi pooja thali adding to its beauty and symbolising purity. They add fragrance, colour, and life to the ritual, enhancing the overall sensory experience and helping make it more spiritual. In a multi-asset fund, debt instruments, such as bonds, debentures and government securities, play a similar role.
Debt in a multi-asset fund which offers stability and regular income, just as flowers add beauty and serenity to a prayer ritual. While equities may fluctuate, debt instruments act as a buffer, ensuring that the portfolio remains balanced and protected from excessive volatility. They add a layer of security, allowing investors to navigate market uncertainties with greater confidence thanks to the regular stream of income that helps to take care of cash flow needs.
Roli/Tilak: Gold, the Protective Shield
Roli or tilak, the red powder used during rituals, is placed on the forehead to symbolise auspiciousness and protection. This sacred mark shields devotees from negative energies. In a multi-asset fund, gold serves as this symbolic shield.
Gold is often regarded as a hedge against inflation and market downturns. Much like the tilak, which protects and blesses, gold offers protection to your portfolio by acting as a safe-haven asset during times of economic turmoil. Its ability to preserve value, makes it an essential component for investors seeking to safeguard their wealth.
In recent times one has seen that gold too has delivered fairly good returns. Part of the reason for the healthy appreciation in gold prices is that the precious metal has various uses and with rising per capita income in India and China — the world’s largest consumers of gold, it seems the demand for the yellow metal is only set to rise.
Coins/Money: Cash Equivalents
Lastly, coins or money are placed on the pooja thali to symbolise wealth, prosperity, and financial abundance. They are meant to invoke blessings for financial growth and stability. In the world of investing, cash equivalent, such as TREPS (treasury bills repurchase agreements) and treasury bills, are the equivalent of these coins.
Cash equivalents provides a safety net within the portfolio, ensuring stability and flexibility during periods of market volatility.
Conclusion: A Harmonious Balance
Just as the pooja thali is incomplete without all elements, a well-rounded portfolio requires a mix of asset classes to achieve balance and long-term success. Multi-asset funds, with their combination of equity, debt, gold and cash offer investors a diversified approach to wealth creation that helps to ensure the vitality and health of your mutual fund portfolio.
(The author is chief executive officer, Baroda BNP Paribas AMC)
Disclaimer: The views and investment tips expressed by experts are their own and are meant for informational purposes only and should not be construed as investment advice. Investors should check with their financial advisors before taking any investment decisions.
