Staggering one’s investments in equity funds instead of putting in a lump sum is a better strategy in the current climate of uncertainty, according to Mohit Gang, co-founder and chief executive at Moneyfront.
A systematic transfer plan or a systematic investment plan staggered across the next nine to 12 months is the best approach, Gang told BQ Prime’s Niraj Shah during The Mutual Fund Show. Large-cap or flexi-cap funds should be the preferred picks based on the safety they offer, he said.
Real estate and infrastructure investments trusts can be great strategies for someone looking to get into equities or hybrid allocations, including commodities, said Gang.
Investors with a long-term horizon of five years or more should consider large- or flexi-cap funds, Gang said. Flexi caps act like pseudo-large caps, with 10–20% allocation to mid caps and a minuscule composition of small caps. “They give you that dynamic flavour across your portfolio.”
In the case of debt funds, Nikhil Kothari, director of Etica Wealth, recommended target maturity funds along with dynamic funds for those with a slightly longer horizon.
“We are very bullish on target maturity funds in terms of exposure when they match the client’s horizon. Apart from that, if someone is willing to take on high volatility in the short term but believes in the overall interest rate and is ready for staggered investments over the next six months, they can look at long-term funds or dynamic bond funds.”
On a short-term horizon, one can expect 6.2–6.5% as a return from target maturity funds, Kothari said. “If someone has got 2026 or 2027 as a horizon, then they can expect a yield of around 7.3–7.5% minus 40–50 basis points.”