iStockI have invested in Axis Bluechip Fund, UTI Nifty Index Fund, and Mirae Asset Emerging Bluechip Fund. Can you suggest funds with moderate or high risk that can give me good returns in next three years? Do you think I need to change my current portfolio?
-Sreedeep S Nair
If you are looking to invest in mutual funds for three years, you should stick to safer options like debt mutual funds. When you are investing for a short period, your priority should be to protect your capital. This is because you do not have time to recoup your losses if there is an adverse situation in the market. Because of the fluid conditions in the bond market due to the Covid pandemic, mutual fund managers have been asking investors to stick to safe options like short-term debt funds. You may consider investing in short duration funds, corporate bond funds, banking & PSU funds, etcetera.
Best short duration funds
Best corporate bond funds
Best banking & PSU funds
You are currently investing in an actively-managed large cap scheme, larger cap index scheme, and large & mid cap schemes. Large cap funds are suitable for conservative equity investors looking to invest for at least five years. Large & mid cap schemes are riskier, as they have the mandate to invest at least 35% in mid cap stocks. They are suitable for aggressive investors with an investment horizon of at least seven to 10 years.
Always choose mutual funds based on your goal, investment horizon and risk profile. For example, if you are investing for a short period, you should always choose bank deposits and debt mutual funds. Further, if you are investing for a few weeks, you should choose liquid funds. If you are investing for a few months, you can choose ultra short duration funds.
If you are investing for a long period of at least five to seven years, you may consider investing in equity mutual funds. However, you should always choose the category based on your risk profile and horizon. For example, if you have a conservative risk profile and have an investment horizon of five to seven years, you should stick to large cap mutual funds. If you have a moderate risk profile, you should invest in multi cap mutual funds.
If you are not clear about the basics of mutual funds, you should seek the help of an advisor. Ask your friends and colleagues for reference.
-Sreedeep S Nair
If you are looking to invest in mutual funds for three years, you should stick to safer options like debt mutual funds. When you are investing for a short period, your priority should be to protect your capital. This is because you do not have time to recoup your losses if there is an adverse situation in the market. Because of the fluid conditions in the bond market due to the Covid pandemic, mutual fund managers have been asking investors to stick to safe options like short-term debt funds. You may consider investing in short duration funds, corporate bond funds, banking & PSU funds, etcetera.
Best short duration funds
Best corporate bond funds
Best banking & PSU funds
You are currently investing in an actively-managed large cap scheme, larger cap index scheme, and large & mid cap schemes. Large cap funds are suitable for conservative equity investors looking to invest for at least five years. Large & mid cap schemes are riskier, as they have the mandate to invest at least 35% in mid cap stocks. They are suitable for aggressive investors with an investment horizon of at least seven to 10 years.
Always choose mutual funds based on your goal, investment horizon and risk profile. For example, if you are investing for a short period, you should always choose bank deposits and debt mutual funds. Further, if you are investing for a few weeks, you should choose liquid funds. If you are investing for a few months, you can choose ultra short duration funds.
If you are investing for a long period of at least five to seven years, you may consider investing in equity mutual funds. However, you should always choose the category based on your risk profile and horizon. For example, if you have a conservative risk profile and have an investment horizon of five to seven years, you should stick to large cap mutual funds. If you have a moderate risk profile, you should invest in multi cap mutual funds.
If you are not clear about the basics of mutual funds, you should seek the help of an advisor. Ask your friends and colleagues for reference.
( Originally published on Sep 09, 2020 )
(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)
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