iStockICICI Prudential Equity & Debt Fund is giving negative returns and it is falling daily. I am thinking of switching to another ICICI Prudential equity scheme. Could you please let me know which scheme is the best? My investment horizon is more than five years and risk profile is moderate
-Ankit Chudawala
We always ask investors choose mutual fund schemes based on their goals, investment horizon, and risk profile. You are currently investing in an aggressive hybrid scheme. These schemes are recommended to long-term investors with a conservative risk profile. They invest at least 65-80% in equity and 20-35% in debt. Because of this mixed portfolio of equity and debt, aggressive hybrid schemes are considered safer and less volatile than pure equity schemes. Therefore, they are recommended to new investors and very conservative equity investors.
You have not mentioned when did you start investing in these schemes or whether you have invested a lumsum or SIP. You have also not mentioned since how long you have been witnessing the fall. So, it is not possible to comment on your investments in the scheme. According to Value Research data, the scheme has given around -4% (in other words, it lost around 4%) in the last one year and it is in the bottom of the performance chart.
The portfolio of the scheme shows that the scheme is betting on energy stocks more, whereas the category is invested more in financial stocks. It is also betting big on metals and communication. Clearly, the fund manager has taken certain calls that may need some more time to deliver. The aggressive hybrid category is betting big lower-rated papers – the category has around 27% holdings in A and below rated papers, whereas the ICICI Prudential Equity & Debt has very small exposure of in such papers. It also has very large investments in AA-rated papers, significantly higher than the category.
You should always invest in aggressive hybrid schemes with a horizon of at least five years. Keep in mind that these schemes invest around 65-80% in stocks. You should give time for these investments to deliver. Also, if the scheme has been underperforming its peers, you should give it at least a year before taking a final call to sell the investments.
Also, you should keep in mind that equity schemes invest almost 100% in stocks. They are riskier than aggressive hybrid schemes. It is extremely important for you to invest in a scheme that matches your risk profile. Also, you should have an investment horizon of at least five to seven years to invest pure equity schemes.
-Ankit Chudawala
We always ask investors choose mutual fund schemes based on their goals, investment horizon, and risk profile. You are currently investing in an aggressive hybrid scheme. These schemes are recommended to long-term investors with a conservative risk profile. They invest at least 65-80% in equity and 20-35% in debt. Because of this mixed portfolio of equity and debt, aggressive hybrid schemes are considered safer and less volatile than pure equity schemes. Therefore, they are recommended to new investors and very conservative equity investors.
You have not mentioned when did you start investing in these schemes or whether you have invested a lumsum or SIP. You have also not mentioned since how long you have been witnessing the fall. So, it is not possible to comment on your investments in the scheme. According to Value Research data, the scheme has given around -4% (in other words, it lost around 4%) in the last one year and it is in the bottom of the performance chart.
The portfolio of the scheme shows that the scheme is betting on energy stocks more, whereas the category is invested more in financial stocks. It is also betting big on metals and communication. Clearly, the fund manager has taken certain calls that may need some more time to deliver. The aggressive hybrid category is betting big lower-rated papers – the category has around 27% holdings in A and below rated papers, whereas the ICICI Prudential Equity & Debt has very small exposure of in such papers. It also has very large investments in AA-rated papers, significantly higher than the category.
You should always invest in aggressive hybrid schemes with a horizon of at least five years. Keep in mind that these schemes invest around 65-80% in stocks. You should give time for these investments to deliver. Also, if the scheme has been underperforming its peers, you should give it at least a year before taking a final call to sell the investments.
Also, you should keep in mind that equity schemes invest almost 100% in stocks. They are riskier than aggressive hybrid schemes. It is extremely important for you to invest in a scheme that matches your risk profile. Also, you should have an investment horizon of at least five to seven years to invest pure equity schemes.
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