It is not a very popular concept to consider debt funds over an SIP. A study conducted in our research centre revealed that if somebody had started an SIP as well as also invested lump sum in 10 popular debt funds five years ago, he would have got a return of 6.7% per annum from SIP and 7.8% per annum from the lumpsum investment. Moreover, if you want to enjoy the growth potential of equity markets but at the same time are not willing to take the risk of capital loss, investing in capital protection-oriented funds with a three- to five-year tenure is a good option.
Today, looking at the stock market index, one will not be able to predict which way the markets are headed and when the next rally will come. But one thing is reasonably certain — stocks of many companies are available at attractive valuations. These are mid- to large-size companies with a consistent track record, good dividend yields and a healthy growth rate. Only those investors whose thoughts are contrarian are willing to look beyond the noise of pessimism. Such investors will serve themselves very well in terms of their portfolio performance over a longer period.
* The writer is vice-chairman and MD, Bajaj Capital