The markets are experiencing volatility due to inflation and rate hike fears. For a long-term investor, this is an excellent opportunity to invest in the market. Weak markets present a rare opportunity to invest in markets at lower levels. It is nearly impossible to find a bottom in the market. Given the state of the markets right now, an investor can invest in a lump sum and then continue investing through SIP. Remember, the structural story of India is intact, and the ones who invest in a calibrated manner will reap the rewards in the long run.
Here are some mutual funds which cater to different risk appetites and can help you to build a healthy portfolio.
Canara Robeco Bluechip Equity Fund: This large-cap fund has been a consistently strong performer with fund managers having more than 25 years of experience in the capital market. Investors who want to invest in equity funds with a low-risk appetite can invest as it has delivered better risk-adjusted returns. With its better than category average Sharpe ratio of 0.66 (risk-adjusted returns) and lower than category average Beta 0.81, this is a good option to invest in Large-cap stocks. The fund focuses on robust fundamentals and competent management with reasonable valuation companies. The fund has outperformed NIFTY 50 in a 3-year and 5-year period.
Mirae Asset Emerging Bluechip: The fund has not delivered its long-term performance recently. But with its long-term excellent record and fund manager, Mr Neelesh Surana’s experience makes it a good option for investors with adequate risk appetite. Its investment style to focus on a strong balance sheet, earnings growth and cash flow has consistently delivered strong returns. At these chaotic times, it is good to invest in a strong business franchise. The fund has invested 46.8% in Large Cap stocks, 25.76% in Mid Cap stocks, and 8.25% in Small Cap stocks. In 3-year and 5-year periods, this scheme has outperformed NIFTY 50 by a wide margin.
Quant Active Fund: This multi-cap fund is for those investors who have a higher risk appetite. The fund focuses on its investment strategy VLRT – Valuation, Liquidity, Risk and Timing. It believes in taking opportunistic bets. The funds have a higher turnover ratio which means the portfolio churns more often. In current times when the volatility is higher, it has outperformed the category average. For the last 3 years period, the fund’s Sharpe ratio is 0.98, the strongest in the category while maintaining the category average Beta. In 3-year and 5-year periods it has delivered absolute returns of 95.39% and 135.65% against NIFTY ’50s 31.20% and 62.40%.
ICICI Prudential Equity & Debt Fund: Investors with a moderate risk appetite can look to invest in Aggressive Hybrid funds, among which ICICI Prudential fund is a strong and good choice due to its highly experienced fund managers, consistent strong past performance and better asset allocation. The fund’s equity asset allocation is skewed towards large-cap stocks, good in current turbulent times whereas the Yield to Maturity for debt instruments is 7%, this provides stability to this fund. The fund has outperformed NIFTY 50 in a 1-year, 3-year and 5-year period.
Kotak Debt Hybrid Fund: Those who have a low-risk appetite but want to invest in the equity market may invest through the conservative fund. In this category, the Kotak Debt Hybrid fund is a consistently strong performer. It holds more than 50% in sovereign funds whereas kept 15% in cash. The combination of these factors provides stability to these funds while equity holdings in a strong business franchise give it an edge over other funds in the category. This fund has outperformed its category while keeping the risk low.
Quantitatively, a vast majority of the above funds are equity funds, with aggressive ideas that aim to build an aggressive portfolio. The above funds will help to stabilize your portfolio and also increase your chance to outperform the benchmark.
(By Abhinav Angirish, Founder, Investonline.in)
Disclaimer: These are the personal views of the author. Readers are advised to consult their financial planner before making any investment.