Markets are at an all-time high. In such a scenario, many fund managers find it difficult to deploy fresh inflows and so do advisers.
Prediction of a normal monsoon, easing inflation and decision of EPFO to increase exposure to equity boosted market sentiments, making it reach all-time high levels. The key indices - BSE Sensex and NSE Nifty closed at 30,582 and 9,512 respectively on Tuesday.
We spoke to a few advisors to find out what are they advising their clients in such a market.
Most of the advisers whom Cafemutual spoke to advise clients to continue with their SIPs. They believe that investors can benefit from rupee-cost averaging through SIPs. However, many advisers recommend large cap and diversified funds for lumpsum investments as the valuation of these stocks are comparatively attractive.
Delhi-based Ashish Chadha of Chadha Investment advises clients to book profits from mid and small cap funds. “I recommended my clients who had invested in 2014 to redeem their investments from small and mid-cap funds. In my view, investors should book profit from funds having exposure to small and mid-cap stocks considering their high valuations. For lumpsum investments, investors should consider balanced funds.”
“I am recommending lumpsum investments in diversified funds and large cap funds considering the attractive valuation of such stocks compared to small and mid-cap stocks,” says Nisreen Mamaji, Founder of Moneyworks Financial Advisors.
Vinod Jain of Jain Investments believes that investors should put some portion of their investible corpus in sectoral funds. “If investors want to go for lump sum investment, they can invest in diversified and balanced funds. However, investors having high risk appetite can put at least 10% of their investible surplus in infrastructure funds as these funds stand to perform well in future due to government push to promote affordable housing sector and rolling out of GST,” says Vinod.
Many advisors also encourage investors to make STP through lump sum investments in liquid funds. Gajendra Kothari of Etica Wealth Management says, “Investors can invest in liquid funds and do STP in a balanced fund for 12-18 months. I think investors should wait for market correction to invest lumpsum amount in equity funds.”
A few fund managers are of the view that advisers should recommend dynamic asset allocation fund to their clients in such a volatile market. Mahesh Patil, Co-CIO, Birla Sun Life MF said that given the high valuations in the market, advisers should recommend dynamic asset allocation funds, where fund managers can rebalance the portfolio based on prevailing market conditions and prospective returns.