This consistency has led many investors to view equity returns as predictable—when, in reality, they are anything but. Today’s investment environment is increasingly complex. Forces like geopolitical tensions, slowing earnings growth, FPI (foreign portfolio investor) outflows, and high valuations, are adding uncertainty. As a result, many portfolios have shifted toward high-return pursuits, drifting away from balanced risk management.
Why predictability matters
Periods of strong performance can sometimes create a false sense of security, leading investors to overlook risks in pursuit of high returns. A few years ago, investors balanced their portfolios across equity, debt, and hybrid investments. Today, however, portfolios are skewed toward equities, particularly in mid- and small-cap stocks, driven by the sharp rallies. The Nifty Midcap 150 and Nifty Smallcap 250 indices, for instance, recorded robust CAGRs of 22 per cent and 28-29 per cent, respectively, over the last three to five years.
This story is from the December 08, 2024 edition of THE WEEK India.
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This story is from the December 08, 2024 edition of THE WEEK India.
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