JioBlackRock CEO Advises 3-5% Portfolio Allocation
JioBlackRock's managing director says investors should allocate a small portion of their portfolios to cryptocurrencies and NFTs amid equity market
Sid Swaminathan, the managing director and CEO of JioBlackRock, advises investors to allocate funds to virtual assets. He recommends dedicating 3% to 5% of a net portfolio to assets like cryptocurrencies and non-fungible tokens.
Swaminathan made the comments in an exclusive interview with LiveMint. He argues that diversification is essential for managing portfolio risk. Gains in one asset can offset losses in another.
Reasons for the Allocation
The equity market faces continued uncertainty, according to Swaminathan. He cites soaring crude oil prices, geopolitical tensions, rising US Treasury Yields, and a strong US dollar as contributing factors. These triggers are interlinked, creating complete uncertainty in global merchandise markets.
In such a scenario, investors should look at assets that benefit from market uncertainty. Since virtual assets are among those beneficiaries, allocating funds to them makes sense.
Defining Virtual Assets
When Swaminathan speaks of virtual assets, he includes a broad range. His definition encompasses cryptocurrencies, non-fungible tokens (NFTs), utility and governance tokens, and tokenised real-world assets, also known as security tokens.
He maintains that the Indian stock market has already taken a heavy beating. Therefore, the chances of further downside are limited. However, a limited downside does not necessarily present an investment opportunity. He also states that the upside in equities will be limited.
Risk and Exposure Guidelines
On the specific exposure to virtual assets, Swaminathan says it depends on an investor's risk appetite. He provides clear boundaries. One can have at least 3% exposure in a portfolio to virtual assets, but it should not exceed 5% of the net portfolio.
The Aladdin Platform for Alpha
Asked about the reason for launching a new fund offer (NFO) for a balanced advanced fund, a highly risky asset, Swaminathan pointed to the firm's proprietary technology. "We have our Aladdin (Asset, Liability, Debt, and Derivative Investment Network) Platform," he said.
He described it as a data-driven platform that gathers all information on a select number of stocks the firm has added. It enables the generation of alpha returns, beating the index return by a decent margin. This margin can be bigger if the investor's time horizon is long.
The views and recommendations are those of the individual analyst. LiveMint advises investors to check with certified financial experts before making any investment decisions.
