If you’re a mutual fund investor seeking to construct a diversified portfolio whereas retaining asset allocation ideas in thoughts, specialists have simple options for you. Rahul Jain, President & Head of Personal Wealth, Edelweiss Wealth Management, mentioned {that a} easy rule for asset allocation is that 100 minus your age might be put into equities, as a proportion. The remainder of your portfolio may be divided amongst debt and gold allocation.
“So if you are 40 (years old), then 60% of your asset allocation can be equity. And right now, seeing the market condition, your gold allocation can be 5-10% because there is a lot of volatility in the market. That means effectively, the rest 30% can be in debt,” Rahul Jain mentioned. “But based on your risk appetite, you can tinker with some of the allocation between equity and debt.”
Rahul Jain was one of many audio system within the panel alongside Hemen Bhatia, Head ETF at Nippon Life India Asset Management and Prableen Bajpai, Founder at FinFix and Analytics Private Limited. The panel was discussing ‘How to build an investment portfolio with passive mutual funds’ on Manage Your Money’s newest version.
Watch the total session right here:
Further elaborating on how a lot stake ought to passive and energetic investments have in mutual funds, Prabheel Bajpai mentioned an investor may select to construct their core with passive methods, nevertheless there may be nonetheless scope so as to add some energetic funds to it, particularly debt. Bajpai mentioned she would neither select purely an energetic technique nor a purely passive technique however a mixture of the 2. She additional added that within the giant caps and now even in mid caps it’s being more and more seen that there’s much less scope for alpha era.
“If you are looking at building a portfolio for a long term basis, say 15-30 years, then it makes sense to have a broader allocation, say about 50% of your overall equity exposure in the large and mid cap space,” Bajpai elaborated. “So in core you are sure you will get market returns, it’s a convenience based strategy and you are not taking any fund-selection related risk. Then the rest can be built with active strategies – like a flexi cap fund, large mid cap strategy and some allocation to the small caps,” she added.
So as soon as an investor has determined their asset allocation, the query is the place to take a position that cash. Hemen Bhatia helped break down the scope of decisions {that a} mutual fund investor has in fairness, debt in addition to commodity facet to handle their portfolio.
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“On the equities side you have both domestic as well as international equities. Within domestic equities, you have various broad market based indices like the Nifty 50 passive fund, ETF or equity fund, Next 50, mid cap 150, or small cap 250. So practically these three to four themes on broad market size can provide you 80-85% market cap exposure. So that actually takes care of your equity portion of your asset allocation,” Bhatia mentioned. “On the debt side, the passive side also has many choices. One can bucket it into three categories – money market ETF, constant maturity funds, and target maturity funds,” he added.
On the commodity facet, traders have choices reminiscent of gold and silver ETF, after which there may be additionally a fund of funds, which is for these traders who shouldn’t have a demat account. Bhatia mentioned we additionally counsel the traders to debate with their cash adviser earlier than investing however these are the loads of decisions that they’ve.
Source: www.financialexpress.com”