For the upcoming Hindu calendar year Samvat 2081, investors should focus on capital preservation instead of high returns, especially in the volatile mid-cap segment. Hybrid funds like multi-asset allocation funds can provide stability.
While mid-cap funds gave highest returns in Samvat 2080, valuations are now stretched making the risk-reward less favorable. Large-cap and balanced hybrid funds are better options for downside protection. Those who want mid-caps should do it gradually over time.
Flexi-cap funds which invest across large, mid and small-caps are also a good choice given their balanced performance over the past year and five years. Multi-asset funds offering diversification across stocks and bonds helped cushion falls and can be considered.
It’s important for investors to diversify across different asset classes like equities, gold and fixed income to reduce volatility and ensure portfolio stability. While this may not give high returns, it can help deal with market fluctuations. Booking profits from segments that see sharp gains is also advised. Overall, hybrid and large-cap funds seem safer bets in the coming year.
