Year 2021 could be more challenging than 2020

Against the odds, surprisingly, both equity and debt markets delivered good returns in calendar year 2020 (so far). The challenge seems to be year 2021. Against optimism, year 2021 may disappoint both in equity and debt.

Equities are at all time highs. Returns could be negative/modest going forward due to high base effect and valuations.

Debt fund current yields are at multiple year lows. Rate cut story seems to be over. Central banks might consider rate hikes going forward. If that happens debt funds returns will fall (on top of lower coupon, ytm's). Aggressive calls can backfire.

It may be a time to be cautious. Asset allocation is extremely important.

Anirudh Kashyap
anirudhkashyap93@gmail.com
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