Should You Invest in Curated Portfolios?

Are you looking to invest in stocks to attain your long-term financial goals? Do you want to get decent returns without having to do intense research on various sectors? You may consider investing in curated portfolios. It is a professionally-managed basket of stocks or Exchange Traded Funds (ETFs) that reflect a particular investment strategy. You are told by the investment manager when to buy, sell or make changes to the basket of stocks. The portfolio investment style is based on various ideas and themes, which may be factor-driven, sectoral or a combination of large-cap, mid-cap and small-cap stocks. Should you invest in curated portfolios?

How do curated portfolios work?

Many curated portfolios are platforms that run on the Registered Investment Advisor (RIA) model. SEBI Registered investment advisors create a basket of stocks and categorise them based on different factors. These baskets of stocks are built on different investment strategies such as growth, value, thematic, sectoral etc. 

You can pick a wide range of investment options through curated portfolios. For instance, you can go beyond investment themes and invest in strategies such as defensive strategies, low volatility, etc. 

Investors research and pick stocks that match their investment strategy and risk tolerance. However, novice investors in stocks may opt for curated portfolios as investment managers do the research and pick stocks on your behalf. It also provides diversification, and the portfolio is tailor-made based on your time frame of investment, risk profile and preferences. The investor must choose the portfolio based on the preferred investment strategy and risk profile and buy it. 

Should You Invest in Curated Portfolios?

Many curated portfolios have a minimum investment size as low as Rs 100- Rs 1,000, making them suitable for retail investors who cannot afford portfolio management services (PMS). For instance, you may have a minimum ticket size of Rs 50 lakh to avail of portfolio management services. Moreover, curated portfolios are offered at a nominal cost as compared to portfolio management services. 

The curated portfolio shows you the investment rationale behind the idea or theme and the methodology behind the portfolio’s construction. Moreover, you can check the performance of the curated portfolio relative to a particular benchmark. 

Market-savvy investors who want to go beyond equity funds may invest in curated portfolios. It gives access to unique investment ideas and themes that traditional equity funds may not offer. For example, curated portfolios have unique concepts like penny stocks, dark horse themes and monopolies. Moreover, you can opt for target sector-specific themes such as Insurance Tracker and Speciality chemicals.  

Curated portfolios have differences compared to traditional mutual funds. Moreover, the investment manager of curated portfolios may build and run the portfolio without any restrictions. You can customise the basket of stocks in a curated portfolio by adding or removing stocks based on your preferences. Moreover, you can even modify the weightage of individual stocks in the curated portfolio. Furthermore, you can customise the curated portfolio during the initial purchase or rebalancing. 

You must choose a curated portfolio only if you are a market-savvy investor, as it may have a massive allocation towards small-cap stocks. However, it is a good choice if you want to go beyond traditional equity funds.

For any clarifications/feedback on the topic, please contact the writer at cleyon.dsouza@clear.in