How to create a budget driven portfolio for maximum returns? Experts weigh in

As the Union Budget draws closer, investors are once again debating whether portfolios should be aligned to Budget expectations or left unchanged. Market experts say neither extreme works well.

The right approach, they say, is moderation.

Speaking on a Budget special show, Nitesh Buddhadev, founder of Nimit Consultancy, and Vikas Puri of Complete Circle Capital said investors should avoid large portfolio shifts. Instead, they advised small and well-thought-out tactical changes, if needed.

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Core portfolio should remain stable

Buddhadev said 75 to 80 per cent of an investor’s portfolio should remain in core holdings. These include long-term, goal-based mutual funds such as flexi-cap and multi-cap schemes. Such investments are meant to stay invested for years and should not be altered because of one Budget announcement.

He said the remaining 20 to 25 per cent can be treated as a satellite or tactical portfolio. This portion can be adjusted around events like the Union Budget. Even here, changes should be limited and disciplined.

According to Buddhadev, the Budget is an event-driven trigger. It should not drive long-term investment decisions.

Review is important, Rebalancing is optional

Vikas Puri shared a similar view. He said many investors confuse portfolio review with portfolio reshuffling. A review should be done every year around the Budget. However, rebalancing is required only if there is a meaningful policy change.

Puri said investors should act only if the government introduces policies that clearly benefit or harm specific sectors. Core funds and all-weather strategies should remain untouched.

Sectors to watch around the Budget

On sectoral opportunities, experts advised investors to focus on broad themes rather than narrow sector bets.

Infrastructure and capital expenditure remain key multi-year themes. Strong order books and continued government spending support this space.

Banking and financial services are also in focus. Lower NPAs, stronger balance sheets and steady credit growth are positives.

Manufacturing continues to benefit from the ‘Make in India’ push. Global supply chain shifts after Covid have added to this opportunity.

Defence and aerospace stand out as well. Higher defence spending and geopolitical factors support long-term growth.

Puri added that power, energy and renewable energy could see more attention. The government’s focus on reducing oil imports and boosting green energy supports this theme.

How to build a pre-Budget portfolio

Experts advised keeping thematic exposure limited. Allocation to theme-based funds should not exceed 10 per cent of the portfolio to avoid concentration risk.

Both also suggested avoiding aggressive sector-specific bets. They added that broader themes such as healthcare or manufacturing offer better diversification.

Systematic investment plans should continue despite volatility. SIPs benefit from market swings around Budget time.

For lump-sum investors, a staggered investment approach over the next 8 to 12 weeks may be more effective.

Asset allocation is key

Experts said asset allocation matters more than Budget timing.

A balanced mix of equity, debt, gold and overseas assets helps reduce risk. It also helps portfolios handle market ups and downs.

This approach works in all market conditions, not just during the Budget season.

The message from experts is clear. Use the Budget to review your portfolio. Avoid big moves. Stay focused on long-term goals.