What ought to my supreme mutual funds portfolio appear like?

I’ve invested in numerous mutual funds schemes. However, I don’t understand how I ought to allocate my investments with monetary objectives. I don’t have thought about asset allocation technique. Therefore, please clarify what ought to my supreme mutual funds portfolio appear like?

— Karan Bhatia

The supreme mutual funds portfolio has the best asset allocation suiting the investor’s threat urge for food, funding horizon and his aim. It must be effectively diversified among the many schemes from completely different sub-asset classes and the publicity in direction of a given single scheme shouldn’t exceed the ten% of the general portfolio. Even publicity must be divided amongst numerous reputed asset administration corporations (AMCs) and fund managers as every fund supervisor has its personal fashion of managing it. There should be some quantity stored apart to fulfill the sudden exigencies. The portfolio ought to get reviewed after each six months or on incidence of any particular market occasion with the assistance of your monetary advisor.

Mutual funds are thought of safer than shares or derivatives as a result of they’re benchmarked towards indices. However, as a result of this asset class can be topic to market threat, isn’t it greatest to teach your self on the topic earlier than diving in?

–Himali Patel

Mutual fund investments are topic to the market threat (as you appropriately talked about) identical to we’ve got in shares or derivatives. The market threat is a scientific threat which can’t be predicted and managed. Hence, one ought to at all times select the funding devices publish analyzing its risk-reward proposition and his personal threat urge for food. We subsequently recommend you search the recommendation from the skilled/monetary advisor earlier than constructing your portfolio in any such devices.

Rajiv Bajaj is joint chairman and MD, Bajaj Capital Ltd.

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