(Apologies prematurely if that is too long-winded for the instant query at hand.Making an attempt to cowl all of the bases for everybody who’s studying alongside, or comes throughout this put up in future.)
Earlier than we start, let’s get this barely tangential side, out of the best way first…
Natraj_G:
That is the one Worth primarily based fund in my portfolio, others are momentum primarily based.
As we noticed earlier on this thread, a key problem with named technique indices is that
until one has reviewed the precise methodology of the index, one doesn’t fairly perceive precisely what one is moving into by investing in them.
additionally one must be aware on the restrictions of the methodology used, to precisely match the named technique, i.e. underneath what circumstances such an index can fail to replicate the technique it’s named after.
Alongside the traces of how we noticed that PE ratios of shares on NIFTY500Value50 may be deceptive if learn with out the context of the “worth” index’s methodology (as they’re anticipated to be decrease than the common PE out there). Equally one would want to grasp the methodology of the momentum indices getting used to understand the nuances concerned.
Now allow us to give attention to the NIFTY500Value50 index as an funding technique
Is it good to be a part of portfolio?
With out the entire context of the remainder of one’s funds(belongings, liabilities, timelines, one’s targets).the reply will likely be “it relies upon”.
Is it good to take a position for long-term?
I consider, it could beat Nifty 500 and Nifty 50 indexes in a future.
Will depend on how lengthy of a long-term we’re considering of,what part we’re in,what part we count on to be subsequent/quickly,how lengthy we count on to be in such a part for, …
Allow us to proceed suppose some extra about this, till our heads damage. 
The NIFTY500Value50 index outperforming the NIFTY50,is dependent upon particular financial circumstances.
financial recoveries, or intervals of rising inflation and rates of interest.
“worth” shares most popular, costs improve.
a speculative bubble bursts or valuations revert to their historic common.
“progress” shares not-preferred, costs stagnate/fall.
In a major-crash or a broad-bull market, each these indices would transfer in the identical route.Be aware: Which is what one would have noticed whereas evaluating these 2 indices over the current occasions.
In concept, the NIFTY500Value50’s out-performance is primarily anticipated to occurduring “rotational” intervals the place buyers shift from progress shares to worth shares.
I’ve acquired fairly good XIRR from previous two years from once I began the funding. So, I considered not stopping my investments. I agree, similar XIRR could not repeat at all times.
What we want the market had been like. (click on to develop)
If one has obtained NIFTY50-like / NIFTY50-beating returns from NIFTY500Value50 within the current occasions, it is perhaps an indicator of the place we’re within the long-term cycle – “Rotation to Worth”
Nevertheless, the market-cycle isn’t a easy linear recurring loop with simple transitions at periodic intervals.
What the market appears to be like like. (click on to develop)
And over the long-term, one by no means actually knowswhich transitions will truly happen, and when
What the market is definitely like. (click on to develop)
Properly… all this and much more… 
So, over the long-long-term,since we can’t predict the precise states, nor their durations, nor transitionsother elements (reasonably than the technique)will (or ideally ought to) dominate our determination making.(to attenuate the fixed time/effort we would want to spend monitoring and reacting to an ever-changing market, all of the whereas trying to attenuate portfolio churn.)
So, what are these “different elements” that ought to dominate the choice making?
Properly, the reply, as at all times, is… “it relies upon”.It relies upon fully on you.The precise funding technique shouldn’t come first.Your private monetary blueprint ought to.With out it, we’re simply constructing on sand.
Allow us to take into consideration the true basis, piece by piece…
What are your precise targets? And what’s the time horizon for every?
A home down fee in 5 years exists in a very totally different universe from a retirement fund in 30. One can’t afford volatility; the opposite completely requires progress to beat inflation over the long term.
What’s your true threat profile?
That is greater than a quiz rating. There’s your psychological tolerance (do you get anxious and wish to promote when markets dip?) after which there’s your monetary capability (can your plan truly survive a 30% drop with out being derailed?). These two are not often the identical.
What’s your present monetary well being?
That is the non-negotiable prerequisite. An emergency fund is vital. With out it, life will inevitably drive you to promote your investments on the worst potential time. Excessive-interest debt is a assured detrimental return that no funding is assured to beat.
… after which you’ll be able to contemplate the logistics, like your private tax scenario, and the way a lot information and time you’ll be able to truthfully commit.
Solely when all of that’s crystal clear will we get to the ultimate step of Portfolio Building.
Does a NIFTY500Value50 fund match into the goal asset allocation?Or are we simply chasing returns we noticed within the final two years?
This complete self-assessment… understanding your individual targets, threat, and funds… that’s the important work. The precise funding you select is the final brick to be laid, not the muse itself.
Get the muse proper, and the technique virtually picks itself. 
PS: @Natraj_G i sincerely hope all this “considering out aloud” above on this put up, helped you suppose by way of. Wanting ahead to your subsequent ideas/conclusion after you digest all this and apply it by yourself financials.
