If you’ve got a 5-year-plus timeframe, equity is the way to go as we explained this week. And if you need money in the very near term, we’ve asked you to stay safe with fixed deposits, liquid funds, and ultra short-term funds. But what about the in-between timeframe? What are your options should you have a horizon of 2-3 years and want better returns that fixed deposits or low-risk debt funds?
When an equity fund is founded on the philosophy of value investing, seeks to reduce volatility through limited hedging and provides international flavour where such opportunities are not available locally, we call it an all-in-one fund. The fund we are talking of also has an expense ratio lower than the equity category average, considering its relatively small AUM size.
What if you want your debt fund to have two things – safety and predictable strategy? Most funds have either of these but not both. Funds that don’t take credit risk are still open to changes in portfolio maturities and one-off events.
Want a fund that will avoid expensive valuations and yet not leave you with the pain of the long wait for value to work? This fund does just that. Not only that, this fund can replace large-cap funds in your portfolio.
Over the past two weeks, we have been writing on the promise in the mid-cap and small-cap segment of the market and how the rally is starting to move beyond a handful of large stocks. While a quick recovery may be some way off, the steep 2-year correction in the mid-cap space offers good opportunities to begin accumulating mid-caps from a long-term perspective.