INSUBCONTINENT EXCLUSIVE:
By DK AggarwalThe domestic market has so far been the best performer among its emerging market peers, and this has attracted investors to
Equity mutual funds have received a strong inflow, mainly driven by strong corporate earnings expectations and near-normal monsoon outcome
amid various concerns such as the impact of trade war, a weak rupee and the forthcoming elections.
On the flip side, the rupee is
continuously depreciating against the dollar and crude oil prices are moving higher on the back of global trade tensions, strengthening
dollar and an overall weakness in emerging market currencies.
Given the current account imbalance and a higher import bill, this may not
It is evident from the recent spike in bond yields due to a rise in current account deficit
To note, the 10-year government security yield recently touched 8 per cent, the highestin four years
With the stock market rising consistently despite higher valuations, as they are right now, would it be risky to invest in equity funds
fully Does it mean one should stay away from equities and risk earning returns that are lower than inflation
Of course, this seems to be a
good time for investors to rebalance portfolios to debt
So, investing in balanced funds, which invest at least 65 per cent of the corpus in equity and the rest in debt, would be a wise decision as
it would ensure capital appreciation in both falling and rising markets
These funds, also known as hybrid funds, can be a good choice for those who are new to the stock market and who have low risk
appetite.
Actually, the stock market offers better returns in the long run but remains volatile in the short term
The debt part of the balanced fund is meant to cushion this volatility in equities
Nowadays balanced funds have got a lot of attention from investors and this is evident from the data that shows this category of funds
recorded a net inflow of Rs 2,630 crore in August against just Rs 287 crore in July
Also, the AUM of the mutual fund industry crossed the Rs 25 lakh crore mark for the first time in August rising from Rs 23.05 lakh crore in
July.
To conclude, investors interested in maintaining exposure to both equity and fixed income securities may consider investing in
One should follow an asset allocation model, with a clear idea of equity and debt allocation
Investing is not just about returns, but also managing liquidity.
So, it is advised to invest in balanced funds through SIPs, which would
allow one to invest a fixed amount either monthly or quarterly over a period, thereby averaging out the cost of investing and delivering the
