5/5/2023 0 Comments Keep it simple securityMost of the surprise that has come in the way of fixed income managers has caught them by surprise and that has hurt investors in the short or medium term. Last five-six years they have mostly been wrong. Once the investor is acclimatised, he understands that this is the way of the market and it is always going to be like this and that is why it turns out to be a higher compounding vehicle because it is not going to be a smooth line all the time.ĩ0% of the fund managers will think that interest rates are likely to go up or likely to go down and that is what will happen. So choose your vehicle carefully to begin with and that is needed only for the first two, three years. If somebody is a first time investor and somebody who is 40 years old should always start with something which has a significant fixed income allocation because all long-term stories and everything is fine but when you are faced with 20% decline of your investment in a brief period of time, it is quite unnerving. The whole idea of SIP is that one should choose carefully to begin with or somebody should be guiding an investor in the right vehicle which may not be happening at a large scale. So one should not try and attempt that fine tuning of allocation. The larger midcaps or the smallcaps turn out to be relatively more stable at a certain point and we have not seen the carnage in the smallcaps at least in the set of holding that mutual funds hold. So that is where we saw the bigger decline. No, it is a futile exercise because whenever you try and attempt that with allocation which would be relatively stable or safer in fact, I noticed that the largecaps were the most vulnerable because FIIs sell out and their mainstay is largecaps. In these uncertain times with crude inflation and geopolitical crises creating havoc, do you stay with the safer ones, that is do you have a higher allocation to largecaps? It is not easy to try and change the allocation every now and then but are you safer there as opposed to the broader markets? Investors should just keep calm and invest more as and when they can and they should not try and increase it in any manner linked to the market and make sure that they do not need this money for a few years. It is always the case for most new investors and smallcap funds that have fallen the most but the lesson here is that despite the relatively higher decline of 7% over the last three months, one will still be sitting on a gain of nearly 30%. Many investors did set up their SIPs chasing recent past performance. What do you make of the recent market correction? While life does not change for SIP investors, should they be topping up their portfolios though the current decline?Įverybody should be topping up every year or whenever anyone’s income rises or your scale of savings rises. It is an outlier for a reason and the risk will visit occasionally and that will be very scary,” says Dhirendra Kumar, CEO, Value Research “Never invest in the best performing fixed income fund in the category.
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