Expert advice: How to make mutual fund investment in FY2019-20

The re-election of the Modi Government is a big positive for the market and we believe that this means the continuation of existing reforms, which should help in the growth momentum of the economy.

Investing in mutual funds by simple methods like the Systematic Investment Plan or SIPs, Photo: PTI

Mutual Funds are considered to be one of the most popular modes of investments by many. One can begin investing in mutual funds by simple methods like the Systematic Investment Plan or SIPs. The funds are managed and overlooked by Asset Under Management (AUM) companies. However, it is always better that one manages their investments in the best possible way and know the expected future of their investment.

Talking on the expectations of Mutual Fund investment in FY20, Renu Pothen, Research Head, iFAST Financial India Pvt Ltd told Zee Business Online, "The re-election of the Modi Government is a big positive for the market and we believe that this means the continuation of existing reforms, which should help in the growth momentum of the economy. We continue to be positive on India from a long term perspective and advise our Investors to take exposure into the equity funds via the SIP or STP route for a time horizon of more than 5 years. Our conservative investors can continue with a 10% allocation into equities, preferably the large-cap space, while our aggressive investors can continue to take exposure into a mix of funds, ranging from large caps to mid caps; small caps, and even sector funds (Infrastructure and Banks)."

"We are back to a phase wherein the mid-caps are trading at a discount to the large caps, which, as we saw in 2011 too, gives fund managers ample opportunities to scout for good bets at attractive valuations," Pothen added.

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Further talking on Fixed income Pothen said, "As far as fixed income is concerned, we believe that investors will continue to maintain a risk aversion towards credit risk funds with the continuous reports of downgrades of companies shaking their confidence in this segment."

Suggestions for Investors:
Pothen said, "In this scenario, we advise our investors to take and exposure into Ultra Short Term Funds /Low Duration Funds and Corporate Bond Funds. For investments ranging from less than a year to a year, we are recommending funds from Canara Robeco Mutual Fund and IDFC Mutual Fund, two of the few fund houses who, as per our analysis, have stayed away from all the corporates that are in trouble."

"This could be attributed to the robust risk management processes and their stringent investment philosophy that emphasizes on high-quality companies, which in short means that they even stayed away from papers which were rated AAA by the rating agencies."

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