Are you trying to reach your long-term financial objectives by investing in stocks? Do you wish to earn respectable returns without having to conduct thorough study on a variety of industries?
Well, then curated portfolios are the way for you!
Consider making an investment in curated portfolios because they are customized and tailored portfolios made by experienced investment advisors solely for each investor depending on the investor’s risk appetite, investment horizon, and investment objectives.
Curated portfolios are a collection of equities or Exchange Traded Funds (ETFs) that are professionally managed with a specific investment approach. The investment manager will advise you when to buy, sell, or modify the stock basket. The investment strategy for a portfolio is based on a variety of concepts and themes, which may be factor-driven, sector-driven, or a mix of large, mid, and small-cap stocks.
Let us discuss in detail about what curated portfolios are and how they work.
Why curate portfolios?
Times have changed rapidly and today, retail investors who cannot afford portfolio management services can avail the various benefits of curated portfolios even if they wish to invest amounts as low as ?100–? 1,000. It is worth mentioning that curated portfolios are more reasonably priced than portfolio management services.
Hence, curated portfolios are an excellent option for market-savvy investors who want to invest outside of equities funds. Investors can gain access to uncommon subjects and investing ideas that conventional stock funds would otherwise not provide. For instance, curated portfolios have distinctive ideas like alternative investments (Leases, Inventory, Startup Equity, Commercial Real Estate and Corporate Bonds among others), monopolies, penny stocks, and dark horse themes.
Investors seeking higher returns from stocks may want to take a closer look at specialised, curated portfolios put up and managed by boutique investment managers and certified financial advisors. Wealth managers claim that individual investors who want to participate in equities other than through mutual funds but lack the knowledge to choose stocks are increasingly turning to these baskets of stocks.
Hence, it can be said that curated portfolios are the future- thanks to their rising popularity and lucrative returns.
Functioning of curated portfolios
Several platforms for curated portfolios follow the Registered Investment Advisor (RIA) paradigm. SEBI Registered Investment Advisors compile a group of equities and group them according to certain criteria. These stock portfolios are constructed using a variety of investment techniques, including growth, value, sectoral, thematic and others.
Through carefully managed portfolios, it is possible to choose from a variety of investing possibilities. For instance, one can invest in strategies like defensive strategies, low volatility, etc. in addition to traditional investment themes.
Research is done by investors, who then select stocks based on their investment philosophy and risk tolerance. However, since investment managers conduct the research and choose the stocks on your behalf.
Moreover, curated portfolios help in strategising investments and offer diversification as the portfolio is created specifically for a particular investor depending on their investing time frame, risk tolerance, and preferences. Based on an investor’s preferred investment strategy and risk tolerance, the investor must select and purchase the portfolio.
Curated portfolios differ from conventional mutual funds in certain ways. Additionally, there are no limitations on how an investment manager running a curated portfolio may construct and manage the portfolio. By adding or eliminating stocks based on your preferences, you can alter the stock selection in a curated portfolio. You can also change the weighting of particular stocks in the tailored portfolio. One can also modify the curated portfolio.
Both novice and experienced investors should choose a curated portfolio because it may be heavily weighted toward small-cap stocks. If you wish to venture outside of conventional stock funds, it is a great option.
Features of curated portfolios
Great risk-adjusted returns
To produce greater risk-adjusted returns is the main goal of all investments. Accordingly, curated portfolios developed by RIAs have the potential to produce higher returns than comparable mutual fund schemes.
Let us understand this with the help of an example.
Consider a company’s hybrid equity scheme as an illustration. They have developed a portfolio that dynamically distributes and switches between equities, debt and gold investments, depending on the market environment, similar to a dynamic asset allocation mutual fund.
Another company’s scheme, on the other hand, has outperformed the category average throughout a variety of time frames when you compare the performance of the two funds.
This is how the magic of curated portfolios work.
RIAs build well-diversified portfolios with a clear investing strategy in mind. You don't need to make a significant number of assets to obtain the best possible diversification. In fact, increasing your investing portfolio over a certain point can actually counteract the benefits of diversification.
RIAs build carefully curated portfolios that are well-diversified and produce the best returns after adjusting for risk. This is because they ensure that there is a right blend of alternative investments, stocks, mutual funds and other investment options so that investors can make the best of their investments.
Superior quality investment portfolios that provide the necessary exposure and produce better risk-adjusted returns can be developed by qualified and experienced RIAs. Furthermore, it's crucial to keep in mind that RIAs are better positioned to provide your assets the time and attention necessary to generate positive results because they don't handle portfolios on the same scale as mutual fund portfolio managers.
In order to give you access to custom financial solutions in a transparent and effective manner, the financial services and investment sector is now focusing on product innovation. RIAs' curated portfolios are one such cutting-edge investment choice.
You no longer have to settle for mutual fund investments to give your portfolio a boost because possibilities of earning more through curated portfolios are now accessible.