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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 Thursday.
Since many MFDs/RIAs find it difficult to deploy fresh inflows, we spoke to a few leading MFDs/RIAs to find out what are they recommending to their clients having lumpsum money and high-risk appetite in such a market.
Overall, many MFDs/RIAs recommend large cap and diversified funds for lumpsum investments as the valuation of these stocks are comparatively attractive.
Sapna Narang of Capital League believes that all time high is just a number and it has nothing to do with asset allocation and long-term goals of clients. “Markets runs on earnings and Indian corporates are doing well. Also, valuation wise, we are neither attractive nor expensive. In terms of recommendation, we follow 50:50 allocation i.e. 50% in equity and 50% in debt. The equity portion is skewed towards large caps as 80% of the profit is driven by 20% of the company.”
Vinod Jain of Jain Privy Client believes that investors should follow asset allocation and preferably do STP to invest in equity funds. “While investors need to be cautious, investors with long term horizon and having aggressive risk profile should look at investing in diversified funds like flexi cap funds, multi cap funds and ELSS as opportunities can be seen across market capitalization.”
However, a few MFDs/RIAs believe in remaining cautious. Amit Bivalkar of Sapient Wealth Advisors believes that investors should not invest their lumpsum money in equity since fixed income looks more attractive and less-risky. “In my view, the time has come to book profit from equity and move to fixed income funds. There is hardly any opportunity in equity investing for lumpsum money. It is better to invest in debt funds which can give over 7% returns with PE of 13x.”
