NJ MARS

Every investor while investing wishes to maximise his returns while minimising his risk. Asset Allocation and Superior scheme selection are time tested proven ways for doing the same. But time and again it has been proven that for an investor to manage his asset allocation and select superior schemes is extremely tough and di­fficult to execute due to operational and behavioural reasons.

MARS (Mutual Fund Automated Portfolio Rebalancing System) tries to overcome these issues for investors whereby they can manage their asset allocation and invest in better performing schemes by the click of a mouse and maximise their returns. As the process is system driven and operationally smooth, it also helps weed out behavioural biases. MARS gives a wide array of portfolios to choose from to the investor based on his risk appetite and periodically triggers portfolio rebalancing based on deviations from the asset allocation of the model portfolio resulting in superior returns to the investor over a period of time.

SALIENT FEATURES OF MARS

• It gives clients access to a range of well diversified portfolios to choose from.
• There are 2 broad sets of asset allocation portfolios:
  • Dynamic Asset Allocation: the asset allocation between equity and debt would vary depending on the risk in the equity markets; higher the risk, lower will be the allocation into equities and vice versa.
  • Fixed Asset Allocation: the asset allocation between equity and debt will be kept fixed.
• The underlying MF schemes will be selected by the NJ Research Team.
• The asset allocation re-balancing would be done yearly for Fixed Asset Allocation and quarterly for Dynamic Asset Allocation.
• The MARS portfolios are only available to clients holding Trading and Demat Accounts with NJ.

BENEFITS OF MARS

• Client can select a model portfolio depending on his requirements and investment needs.
• Helps the client to invest in well researched mutual fund schemes in his portfolio.
• Simple execution tools for portfolio rebalancing.
• Enhanced returns resulting from disciplined asset allocation.
• HOW DOES MARS WORK
  • Portfolios designed by the NJ Research team will be made available on the MARS platform.
  • Client has an option to select any of the available portfolios with the help of his NJ partner.
  • The client can buy into MARS by transferring his existing MF portfolio.
  • The client can also buy into MARS through cheque / net banking / debit card / auto debit mandate
  • The client will be required to authorize all the purchase transactions either online through a single click or signing the TIS provided by NJ Partner.
  • Rebalancing of the portfolio is triggered as per schedule of various portfolios. The client needs to authorise the same to realign the portfolio with his target asset allocation.
  • WHAT IS ASSET ALLOCATION
    Asset Allocation, simply means, investing money across asset classes, namely equities, bonds and cash. It is the key ingredient for any investor wanting to create wealth in the long term. Asset allocation is also important because diverse asset classes, due to their inherent nature, behave differently. Equity, which represents ownership in a business or enterprise, is volatile in nature and tends to go up and down in the short term. On the other hand, bond, which represents lending money to a business or enterprise, is relatively more stable and provides regular income in the form of interest. Diversifying the client's investments across different asset classes will result in diversifying the investment risk and create a well balanced portfolio that can offset the impact of investments that are currently not doing well and take advantage of investments that are currently growing and performing well.
    PORTFOLIO REBALANCING
    Values of individual asset classes can go up and down in line with the underlying market movements. While this is no reason for the client to panic, it is important for the client to review his initial asset allocation with the current asset allocation and make course correction through portfolio rebalancing.
    HOW TO DETERMINE THE BEST ASSET ALLOCATION
    Asset classes vary on the basis of their average returns and volatility. Equities have the potential to give higher returns but the volatility of the returns is also high. Bonds are relatively more stable and pay fixed interest at defined frequencies.
    The best approach to asset allocation is to find out the risk appetite of each client. The greater the appetite for risk, the larger the share of the portfolio that can be allocated to equities.
    Risk appetite may differ from individual to individual based on his investment horizon, ability to bear loss, current financial status, current job status, social background etc. These are some of the factors affecting risk appetite for any person. The advisor should determine the right asset allocation for the client based on his understanding of all these factors.