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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 Tuesday.
Deploying fresh inflows has always been a challenge for MFDs, more so in such a market. We spoke with leading MFDs and here is what they are recommending to their clients with a high-risk appetite and have lumpsum money.
Amit Bivalkar of Sapient Wealth Advisors is optimistic about large cap funds. He said that MFDs should look at recommending large cap funds rather than mid and small cap funds.
Amit said, “Many investors look at past performance to invest their money. Today, mid and small cap funds have been performing extremely well but liquidity can be issue in these segments. On the other hand, we see a lot of opportunities in large cap space due to attractive valuation and economy’s health.”
Further, Amit said that MFDs should also look at multi asset funds and balanced advantage funds to benefit from the growing economy.
Ashish Chadha of Chadha Investment believes that MFDs should take STP approach to deploy lumpsum money in equity funds. “While short term debt funds like money market funds are offering attractive returns, one cannot shy away from equity funds considering the growing economy of our country. Hence, it is better to do STP for three years in a diversified equity funds,” he said.
Ashish Shah of Wealthfirst feels that MFDs should segregate lumpsum amount in two parts - 70% equity and 30% liquid. The first 70% should be spread across large, mid and small cap funds where majority of weightage should be given to mid and small cap funds due to good prospect of earnings growth. The remaining corpus should be deployed in liquid funds so that it could be invested in equity funds whenever there is a correction, he said.
Bharat Phatak of Scripbox recommends balanced advantage funds to his clients. He said, “While it is good time to rebalance investment portfolio, investors having fresh lumpsum money should look at investing in hybrid funds like balanced advantage funds. These funds can automatically rebalance their portfolio based on the market valuation.”
Gajendra Kothari of Etica Wealth has a different approach for new clients and existing clients. If a client is a first-time investor, MFDs should be cautious and recommend hybrid funds. “Even if you tell clients to stay invested for over 5 years in equity funds, she may not be comfortable after seeing volatility. Hence, it is better to onboard them through less volatile products compared to pure equity funds like aggressive hybrid funds.”
For existing clients, Gajendra recommends top up in existing diversified funds. “Existing clients have invested in these schemes and seen some track record. Also, incremental investment in existing diversified schemes ensures that his portfolio will be less prone to minor blips in markets.”
