Investing while the markets are volatile can be tricky. One needs to be very cautious while selecting funds during uncertain markets that we are witnessing at present. In these conditions, investors should ideally consider various portfolio management strategies while investing in mutual funds, including focussing on long-term investment through Systematic Investment Plan (SIP) mode.
Rajesh Cheruvu, CIO, WGC Wealth said that given the current volatile market conditions and the likelihood that markets may remain weak due to both global and local macro factors, investors should ideally narrow down their investment towards thematic, sectoral, market neutral or momentum-oriented strategies.
“Investors should look for making investments in funds which can give return more than the benchmark performance following proper index investment strategy generating high returns over a period of time, mainly in the long run. Invest in those asset classes which can achieve their investment objective. Also, they should be actively managed based on the mood of the markets swinging between market caps or Value, Contra and Focused manager styles. This segmentation helps investors to budget and manage the portfolio risks in a focused manner and generate good returns on their portfolio,” he said.
For example, investing money in an Exchange Traded Fund (ETF), where you can also track the performance of a specific index, such as an equity or bond index, mirroring its returns is a good strategy.
If you want to make some investment in mutual funds during the current market situation for the long run, here are some recommendations by experts based on several parameters.
Following the right investment strategy can help investors make gains from the current market situation.
Performance of the funds is given below in the table:
(* Comparison of Scheme Vs. Benchmark Return is considered for 3 years)
While recommending these funds, advisors take into account the fund manager’s ability to manage and position the portfolios in different cycles. This factor is important, not only in the current role but also in his/her earlier role in the case, should s/he have a short history in the present role. Historical risk and return help only to understand the manager’s style and his consistency in meeting the fund objectives. Historical data might not be adequate enough to access the future outcomes of the schemes. In this regard, one has to see the current positioning of the portfolio with respect to sectoral and security specific allocations and respective valuations and earnings outlook.
Disclaimer: Moneycontrol.com advises users to check with certified experts before taking any investment decisions.