Asset managers recognize that certain market segments appear stretched, but advise against avoiding the market entirely. Instead, they recommend investing in simple products and diversifying investments across stocks. fixed deposits, and gold. ET spoke to some asset managers about the best route to invest an amount of Rs 20 lakh in the markets under the current circumstances.
For moderately conservative investors, a balanced approach with an allocation of 50% to equities and 50% to gold and fixed income is sensible, asset managers say. Within the equity sector, they recommend index funds or flexi-cap funds for large-cap exposure. Considering the recent spikes in mid-cap and small-cap stocks, it is advisable to diversify investments in these schemes in the coming year and also avoid investing lump sums, they say.
For more conservative investors, limiting equity exposure to a maximum of 30% or opting for asset allocator products such as balanced advantage funds is a safer strategy, the ET report said. Allocate around 50% to fixed income and 20% to gold given the challenging equity market conditions, asset managers told the financial daily.
For example, a moderately conservative investor can invest around Rs 8 lakh in fixed deposits out of Rs 20 lakh, and a conservative investor can put Rs 10 lakh in fixed deposits. While a conservative investor can invest Rs 6 lakh in equity instruments, a moderately conservative investor can put Rs 10 lakh in equity products.
Where can you invest Rs 20 lakh?
The funds recommended above by ET are chosen based on their performance over a year.