Over the last few days, the equity markets have been touching new highs. In fact, both the key indices BSE Sensex and NSE Nifty closed at record levels on Tuesday.
Deploying fresh inflows has always been a challenge for investors, more so in such a market. Experts are recommending various strategies to their clients who are looking to invest lumpsum money. Let us read some of these suggestions :
Suggestion 1 : Most of the seasoned advisors are optimistic about large cap funds. They are recommending large cap funds rather than mid and small cap funds in current scenario. “Many investors look at past performance to invest their money. Today, mid and small cap funds have been performing extremely well but liquidity can be issue in these segments. On the other hand, we see a lot of opportunities in large cap space due to attractive valuation and economy’s health.... says experts ". They also suggest that investors should look at multi asset funds and balanced advantage funds to benefit from the growing economy
Suggestion 2 : Investor should take the STP approach to deploy lumpsum money in equity funds. “While short term debt funds like money market funds are offering attractive returns, one cannot shy away from equity funds considering the growing economy of our country. Hence, it is better to do STP for three years in a diversified equity funds,” some experts believe.
Suggestion 3 : Investors should segregate lumpsum amount in two parts - 70% equity and 30% liquid. The first 70% should be spread across large, mid and small cap funds where majority of weightage should be given to mid and small cap funds due to good prospect of earnings growth. The remaining corpus should be deployed in liquid funds so that it could be invested in equity funds whenever there is a correction, some advisors suggests
Suggestion 4 : Some advisors recommends balanced advantage funds to the investors. They say, “While it is good time to rebalance investment portfolio, investors having fresh lumpsum money should look at investing in hybrid funds like balanced advantage funds. These funds can automatically rebalance customers portfolio based on the market valuation.”
Suggestion 5 : If a client is a first-time investor, they should be cautious and invest in hybrid funds only. “Generally clients are not comfortable after seeing volatility, even though they have a long term investment horizon. Hence, it is better to start through less volatile products compared to pure equity funds like aggressive hybrid funds.”..says some advisors. For existing clients, a top up in existing diversified funds is recommended. “Existing clients have invested in these schemes and seen some track record. Also, incremental investment in existing diversified schemes ensures that his portfolio will be less prone to minor blips in markets.”
The above suggestions are independent views of various investment advisor. As far as we are concerned, we believe that Asset Allocation is the best and most successful strategy during bull phase. One should go light on Mid & Small Cap funds.
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Disclaimer :
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including the fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of future performance of the schemes. The Mutual Fund is not guaranteeing or assuring any dividend under any of the schemes and the same is subject to the availability and adequacy of distributable surplus. Investors are requested to review the prospectus carefully and obtain expert professional advice with regard to specific legal, tax and financial implications of the investment/participation in the scheme.