Prosperity Discovery Fund – Interim Update Q2FY22
Q2 FY22 – PDF Interim Update
Season’s greetings, I wish you a safe and happy Diwali in advance, may the festival of lights bring abundant prosperity and cheer into your lives.
This note is to give you a quick update on our market outlook for the short run and some of the changes we have made to Prosperity’s Discovery Fund.
Investors who have been reading our quarterly updates over the last couple of quarters may already be aware of our defensive stance in the current market scenario.
“ While the market continues to scale new heights, we are cognisant of the emerging divergence between current valuations and reported earnings. ”
- Excerpt from quarterly update of Q1FY22
Read the full update here: https://www.pwm-india.com/post/prosperity-discovery-fund-quarterly-update-q1fy22
In the short run, supply chain disruptions and raw material shortages have led to hyper-inflation in the price of several key raw materials and commodities. Service related industries too have been impacted by talent shortage and non-linear wage hikes. On the global front ballooning debt of several advanced nations coupled with liberal monetary policies and rising inflation are key risks factors to watch out for.
The above events in tandem with high stock valuations have resulted in a sharp correction of the broader markets over the past week.
I'm happy to share that the net impact of the correction has not been severe on Prosperity’s portfolio. We have anticipated and prepared for the market volatility by booking profits and moving to less volatile asset classes over the last couple of months.
We further expect this volatility to continue into quarter three and quarter four before the supply-demand scenario normalises and companies report improved earnings on the back of various capex initiatives.
At this standpoint our primary aim is to protect our capital and our profits from market volatility. We are doing so by moving to a significantly less volatile index based ETF for some duration. This would significantly reduce the impact of any correction in the small and midcap indices on Prosperity’s portfolio, while still giving us a chance to benefit from the broader economic recovery post pandemic.
Over the next 6-8 months we are positive that the markets will give us an opportunity to once again invest aggressively at much more attractive valuations.
As always we remain bullish on the long term prospectus of the country and are confident in our ability to generate wealth in the Indian capital markets.
MD, Prosperity Wealth Management