Markets are inherently volatile and fearing volatility investors typically make hasty decisions. What can you as an MFD/RIA do here?
In a one-to-one conversation with our Associate Editor, Nishant Patnaik, Anupam Tiwari, Fund Manager - Equities, Axis MF gave away tips on managing volatility and also shared with us some vital investment tips.
Here are the key insights.
- Handling market volatility
Irrespective of the market volatility, investors should follow an investing plan. There should be a primary plan that creates a bouquet of investments keeping in mind investors’ risk appetite and time horizon. Every new high will be an all-time high and as the economy grows, it will continue to make new highs over time but will also have intermittent volatility.
While time is the simple solution to volatility, the dynamic/balanced advantage category can take care of investors’ intermittent worries.
- First-time investments
Time plays a crucial role in equity investments and interested investors should start early. Investors fear volatility and that impacts decision making. Hybrid funds are a good way to start a new investment journey. As these funds are comparatively less volatile, they stabilise the overall investment portfolio and give decent participation in the equity market. Besides, the debt component prevents capital loss during drawdowns.
- Deploying incremental inflows
Investors with a long term time horizon of seven years and above (for high-risk categories) and five years and above (for other categories) can consider investing through lump sum. Otherwise, it is advisable to have a staggered approach through a fixed SIP plan for the next two to three years.
- Investment avenues
Axis Equity Saver Fund generally caps their equity exposure to 40-45% and are ideal for a time horizon of one to three-year whereas, investors willing to take slightly more risk can consider Axis Balanced Advantage Fund (Axis Dynamic Equity Fund). Here the equity exposure can range between 30% and 100% and requires a time horizon of more than three years.
If the above excerpts interest you, you can watch the entire episode by clicking here.
