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Many MFDs are finding it difficult to deploy lumpsum money in equity markets. We spoke to a few experts to understand what MFD should do with incremental lumpsum money meant for equity investment.
Chirag Mehta CIO, Quantum MF believes that MFDs should consider large cap funds and limit allocation to mid and small cap funds at 15-20%. He said, “Depending on the risk appetite of clients, MFDs should recommend investors to invest across market caps with major allocation to large cap funds. Within large cap, they should diversify it further between growth and value style.”
Rahul Singh, CIO, Tata MF also feels that it is good time to invest in large cap funds due to favourable risk reward ratio. He said, “Considering heightened valuation of small and mid cap companies, large caps seeem to be favourable choice. In addition, investors with high risk appetite should also look at infrastructure and business cycle funds. Other investors should stick to balanced advantage funds to deploy lumpsum money.
Agra MFD, Shifali Satsangee, of Funds Ve'daa is of the view that investors should take passives route to invest in large cap funds. She said, “Generating alpha in actively managed large cap funds is difficult. Hence, investors should deploy money in large cap index funds.”
Kolkata MFD Saibal Biswas, Saibal Biswas Associates is also comfortable flexi cap funds with large cap bias at this juncture. He said, “MFDs should recommend flexicap funds with large cap bias. MFDs should also look at large & mid cap funds, as these funds can generate alpha.”
Vinay Paharia, CIO, PGIM MF finds large cap funds relatively more attractive but he recommends to invest across market caps in quality and growth-oriented stocks. He said, “A lot of quality and growth-oriented stocks have underperformed in the past year but all of them have a very good track record in the long term. I feel people should invest lumpsum corpus in these funds.”
