Sorbh Gupta, Fund Manager- Equity, Quantum Mutual Fund said a long-term investor should create a basket of MF with different styles & M.Cap segmentation. Ideally, a 20% allocation should be made to a value fund.

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In an interview with Zeebiz's Kshitij Anand, Gupta said the equity allocation should have no more than 5-6 funds. This basket should be then reviewed periodically for any style drift or key management changes. Edited excerpts:

Q) If someone plans to invest Rs 10 lakh post Budget – how should one segregate his capital. Which sectors will make the cut and why?

A) Indian Economy is on a cyclical recovery path. This is also reflected in the first credible corporate earning upgrade cycle in 7-8 years.

In this environment, cyclical sectors are expected to see maximum earning upgrades. We believe Banking, Consumer discretionary & Material sectors to do well in this environment.

The Indian IT sector will also benefit from global cyclical recovery and will see good earnings growth rates in the next couple of years. However, one must be cognizant of valuations before making buying decisions.      

Q) If someone has an MF portfolio and wants to invest money – Which funds should one be looking at? 

A) A long-term investor should create a basket of MF with different styles & M.Cap segmentation. Ideally, a 20% allocation should be made to a value fund.

Around this layers of different styles & M.Cap segment MFs can be built.

Overall, the equity allocation should have no more than 5-6 funds. This basket should be then reviewed periodically for any style drift or key management changes.

Q) There was not much cheer for investors investing abroad – what should be the strategy which one should follow for international investing as the AUM seems to be on the rise?

A) Most investors follow a herd approach while considering new avenues of investment whether it's international investing or Crypto.

While international investing is a good way to diversify the ‘India Risk’ the allocation towards such a fund should be small, until the investor understands the risks associated with such an allocation.

Q) Any thematic fund which could be good investment opportunities in the next 12-24 months as many NFO was rolled out recently to capture the India story?

A) A well-managed diversified equity fund is always the best way to take exposure in equity markets. The fund manager in these funds takes the call on sector opportunities and valuation and position the fund accordingly.  

One could, however, look at thematic funds like ESG or sustainable investing. This is an emerging theme globally and is attracting a lot of attention.  

Here again, one should understand the fund house’s approach and skillset for managing such thematic funds before committing any allocations.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)