Investors who want to start afresh in the new financial year often wonder if the past performance is the only “good enough” parameter to start investing. Investors often wonder if the new financial year and post-budget scenario thrown some new bright ideas that can generate better returns? Macros keep changing.
We at Mutualfundwala are trying to factor in the following to suggest a set of schemes that may generate a better alpha in your portfolio:
- Election year, political uncertainty and probability of a hung assembly.
- Assembly elections in 4 states, i.e., Karnataka, MP, Rajasthan and, Chhattisgarh.
- The Probability of adequate monsoon.
- Oil prices and interest rates.
- Earnings growth and demand revival.
It is not the scope of this blog to provide a detailed analysis of the above 5 parameters. However, we shall try to suggest a set of schemes that shall protect the downside if any or all of the above variables is bad news for equity investors.
Equity Linked Saving Schemes: ELSS (Equity Linked Saving Schemes) are mutual fund to avail tax benefits up to 1.5 lakh under Section 80C. We at Mutualfundwala will suggest that you take the SIP route for investing in ELSS funds. If SIP is cumbersome you may use STProute. For eg, if an investor needs to save Rs.1.5 lacs then you may invest @ Rs. 12,500 pm. Starting April this shall total to Rs. 1.5 lacs in March 2019.This shall help you save the last-minute rush and provide averaging. You may consider the following ELSS to invest in. – IDFC Tax advantage, L&T Tax Advantage, DSP BlackRock Tax Saver, Aditya Birla Sunlife Tax Relief.
Mid and Small Cap Mutual Funds: Mid and small cap funds have the potential to give exceptional returns consistent with the high risk associated with these funds. We suggest you avoid investing in Mid and small-cap funds for the time being. However, if you so wish to invest, use the SIP route and have a minimum time horizon of 5-7 years. Please note Mid and small cap stocks are highly inflated and investing purely on the basis of past performance may backfire badly., You can invest in mid-cap schemes like Mirae Asset Emerging Bluechip Fund, Kotak Emerging Equity Scheme, HDFC Midcap opportunities fund, and Franklin India Prima Fund.
Large Cap Mutual Funds and Large-cap based balanced funds: These times are ideal for large-cap funds. Investing in large companies with large market capitalization, helps you to stay in a relatively safe zone. So if you have a low-risk tolerance and you are willing to invest in funds for a longer period, you must choose either balanced schemes or large-cap schemes. Some of the recommended schemes are Mirae Asset India Equity fund, Franklin India prima plus, SBI Bluechip and for balanced investors may consider HDFC Prudence and Invesco India dynamic equity fund.