{"id":5826,"date":"2023-09-22T04:58:40","date_gmt":"2023-09-22T04:58:40","guid":{"rendered":"https:\/\/blog.certifiedfinancialguardian.com\/?p=5826"},"modified":"2023-09-22T04:58:41","modified_gmt":"2023-09-22T04:58:41","slug":"how-a-multi-asset-fund-can-protect-your-portfolio-at-a-market-high","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2023\/09\/22\/how-a-multi-asset-fund-can-protect-your-portfolio-at-a-market-high\/","title":{"rendered":"How a Multi-Asset Fund Can Protect Your Portfolio at a Market High"},"content":{"rendered":"\n

The AMFI monthly data on inflows into sub-categories of equity mutual funds sheds interesting facts about investor behaviour. In the endeavour to clock high returns, a lot of money is flowing into mid-cap funds<\/a>, small-cap funds<\/a>, multi-cap funds, and sector & thematic funds, without much attention given to the indicative risks involved.<\/p>\n\n\n\n

The graph indicates that many of these sub-categories are placed at the higher end of the risk-return spectrum. Simply put, they are high-risk high-return investments.<\/p>\n\n\n\n

Graph 1:\u00a0Risk-Return Spectrum of Equity Mutual Funds<\/em><\/strong><\/p>\n\n\n\n

\"\"<\/p>\n\n\n\n

Note: For illustration purposes only
(Source: PersonalFN Research)\u00a0<\/p>\n\n\n\n

“The essence of investment management is the management of risks, not the management of returns.” <\/em>– Benjamin Graham (the father of value and the author of the book, ‘The Intelligent Investor’<\/em>).<\/p>\n\n\n\n

As a thoughtful and wise investor, you ought to be mindful of the risk involved and not invest blindly going by just the returns. You see, for every level of return you seek, there is a high risk.<\/p>\n\n\n\n

It’s important to set your risk-return expectation right<\/a> when investing in mutual funds and not just be carried away by irrational exuberance.<\/p>\n\n\n\n

At present, when the Indian equity markets are at a high, there is no point going gung-ho with equities and disregarding the other important ones, such as debt and gold. If the markets turn volatile or correct, it is debt and gold that could add stability to your investment portfolio.<\/p>\n\n\n\n

Near the lifetime of the Indian equity market, what you require to follow is a Multi-Asset Approach<\/strong> vide a Multi-Asset Fund<\/a><\/strong>, which shall provide enough diversification–the basic tenet of investing.<\/p>\n\n\n\n

While India is a ‘bright spot’ in the global economy with higher GDP growth clocked, the Modi-led- NDA government has initiated several reforms, stressed on ‘Make in India<\/a>‘ to make India self-reliant and push exports, investments have gone up, and the consumption story is reflecting prosperity, one also needs to watchful of the headwinds.<\/p>\n\n\n\n

The following are the key risks to the Indian equity markets:<\/p>\n\n\n\n