Manage market volatility with multi-cap funds..

Multi-cap funds are diversified mutual funds which invest in stocks across market capitalization.

Amidst all the on-going political events in the world, markets are the most affected and hence it becomes difficult to anticipate market movement. In order to stay securely invested, Multi-cap funds could be the best bet for an investor. Takes a look at multicap scheme, which have performed better and have been able to sustain their performance. Here is a research report of one of the Multi-cap fund.

 

 

L&T India Value Growth Fund is an open ended scheme launched in January 2009. This belongs to a Diversified category as the fund has exposure across large cap, Midcap and Smallcap.

Portfolio Analysis :As per the sectoral holdings Banking/Finance have been most favoured sector for this fund as it is contributing 19.54% to the entire portfolio followed by Oil & Gas Sector.

Top Holdings and Sector Allocation for this fund are shown below: 

 

Risk Profile: This fund belongs to the high risk category given complete exposure only to equity. However, by way of SIP the risk can be reduced and also prudent asset allocation across different scheme including debt and balanced fund can provide optimum mix and reduce the risk. Also as we think long term trend for Nifty is on upside this fund offers good opportunity to ride the next wave on upside.

Technical Perspective: The above weekly chart of NAV suggests that since mid-2013 this fund has showed impulsive rise. The impulsive move from 27 to 40 suggests that long term trend for this fund remains on upside. In the start of 2018 NAV has competed minute wave 3 and since then wave (3) is on-going. One can continue to remain stay invested or can start investing through SIP as this fund is in impulsive wave (3). Looking at the Nifty, some pressure cannot be ruled out but it is advisable to stick to the on-going trend. Currently wave 4 of (3) seems to be on-going.

Investment Perspective: One can continue to invest in this fund in staggered fashion.

Many a times investing in multi cap funds becomes complex. In case you don’t possess enough financial knowledge and are finding  it too difficult to understand or  To know more about other prevailing Multi-cap Funds Click here

Does experience of Fund manager matter before selecting which Mutual fund to invest in?

A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities and that’s why it becomes essential to check the credentials and past performance of a fund manager.

While many investors’ often get impressed seeing more number of schemes managed by the fund manager (of a respective fund house); this is rather worrisome since it reflects the pressure on the fund manager while managing investors’ hard earned money. It may so happen that he may simply replicate the portfolio, and in the bargain defeat the unique mandate of each scheme managed by him. In our view, ideally, a fund manager should not be managing more than 5 schemes; as such a “funds-to-fund manager ratio” can help in bringing in efficiency while managing your hard earned money.

Also one should not merely invest in a respective mutual fund scheme of a fund house, just because it is managed by a star fund manager. Many mutual fund distributors / agents / relationship managers may persuade you to invest in mutual fund scheme managed by a star fund manager; but then you need to ask relevant questions on track record of performance of all the mutual fund schemes managed by the star fund manager (which your mutual fund distributor / agent / relationship manager has high regards), where you need to check the following:

• Returns of the respective mutual fund schemes
• Risk that investors are exposed to (as revealed by the Standard Deviation)
• Risk- adjusted returns achieved by the fund (as revealed by the Sharpe Ratio)
• Portfolio churning (as revealed by the Portfolio Turnover Ratio)

Moreover, as a litmus test you also need to ascertain how the respective mutual fund schemes managed by the star fund manager has sailed during various market cycles (i.e. during bullish and bearish cycle)

To know more about which other factors needs to be considered before investing in any mutual fund CLICK HERE

Balance your funds by investing in balanced funds

Balanced funds or hybrid funds are a mix of equity and debt mutual funds. They keep their investment in the ratio of 60-40 where 60% of the amount is invested in stocks, and the balance 40% is invested debt instruments. Balanced funds maintain their formula of income generation and capital appreciation

Balance funds have their advantage and disadvantages:

The pros: The investor gets diversification in a single docket of mutual funds without the hassle of analysing and selecting each and every equity and debt fund.

Balanced funds are suitable for persons who are willing to invest a smaller portion of their income monthly.

A balanced fund allows the investor to make systematic withdrawals while maintaining suitable asset allocation.

The cons: They are not entirely risk-free, many investors are of the view that less volatility means risk-free. That is not the case; balanced funds also have their share of risks..

While holding only a specific class of funds, the investor can relocate some of the funds into other mutual funds as diversification for tax planning or wealth creation. However, in balanced funds, it is not possible as the same mutual fund owns both types of the asset class.

Choosing a balanced fund that suits the investor’s long-term goals is very important. When assessing the equity part, the investor should look for factors like the fund house, fund manager, asset value, constancy of portfolio, diversification, risk taken by the fund, asset size, and the historical returns. When assessing the debt funds, they should pay attention to the asset quality, fund manager’s qualification and sensitivity of the fund to rate changes.

Balanced funds are custom-made for new investors and those looking for relative stability for their savings. Hence balanced fund provides a good investment option wherein investing in one particular fund you can have exposure to equity as well debt market.

To know more about balanced fund and to invest smartly CLICK HERE