Why Wealth Baskets Should Be A Part of Your Portfolio

Why Wealthbaskets should be a part of your portfolio
Now, let’s say that you believe that the Indian markets are on a strong growth trajectory and certain stocks are going to respond well to the increase in growth momentum. To capture this, you would like to invest in these stocks. What are the options that you have? One option could be to go the mutual fund way. Before we get into why this might not be a good option, let us first understand a bit about mutual funds. These are investment vehicles that invest across multiple asset classes like debt, equity, gold, etc., and follow different investment themes. So, if you invest in mutual funds then you have the option of investing in an equity fund that could follow a market capitalisation theme, i.e., invest in large-cap, mid-cap, or small-cap companies, or a sectoral theme. However, there are no options of investing in funds that specifically follow the momentum strategy, i.e., invest in stocks that have high momentum indicators and can benefit from sharp market up moves. If not mutual funds, then the other option could be to directly invest in momentum stocks. Now, this is a challenging task for several reasons.
  1. You need to know and understand momentum metrics that work best
  2. Then, you need to identify stocks that are most likely to respond to these momentum metrics
  3. You also need to time the markets so that you can ensure that you enter when momentum picks up and not in the middle of the cycle
  4. And lastly, you need to understand when to exit, i.e., identify when the momentum is waning
Definitely not an easy task. So, what can you really do?
The best solution – Stock basket  
The best option would be to invest in a stock basket that follows the momentum strategy. Let’s break this into understanding a stock basket. As the name suggests, a stock basket is simply a specially curated portfolio of stocks that follow a particular theme, strategy, or even a sector. The main goal of a stock basket is to create a carefully selected portfolio of stocks that follow a particular investment theme and can benefit investors who want to create such specific exposure. At Stoxbox, these stock baskets are called Wealthbaskets and perform the same role as a stock basket. So, if you want to invest in high momentum stocks, then you can purchase a Momentum Box, or want to leverage smart beta strategies by combining the benefits of active and passive investing then you can invest in a Balanced Edge Box, or even invest in a Technofunda Box that leverages both technical as well as fundamental analysis. A stock basket or Wealthbasket scores over direct equity or mutual funds in several ways:
  • One, it provides concentrated exposure to a theme of your choice.
  • Two, it leaves the stock selection and management to experts.
  • Three, it helps you diversify your portfolio by adding elements that are not easily available outside of stock baskets.
  • Four, it gives you complete control as once you purchase the Wealthbasket, the stocks in the curated portfolio reflect in your demat account.
  • Five, it provides complete transparency in terms of holdings.
  • And, six, it can help you create long-term wealth.
The curated nature of a stock basket ensures that every kind of investor, i.e., beginner or advanced, has the option to invest in multiple themes, across time frames to meet their multiple financial goals and requirements.
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