If you are new to value investing, you should acquaint yourself with this style of investing and its merits and demerits. A value investor tries to choose stocks that are available at cheaper valuations. These investors employ various ratios and methodology to identify such stocks.
Focused funds have a concentrated portfolio. That means that the fund manager will choose stocks based on his or her conviction and take a meaningful exposure in the stock. Such investments can pay off handsomely if the call goes right. However, if a few calls go wrong, the scheme will suffer a lot. This is the trouble with concentrated bets.
As per the Sebi mandate, small cap schemes must invest in companies that are ranked below 250 in terms of market capitalisation. These schemes also will have to invest at least 65% in small cap stocks.
If you are convinced that mid cap schemes are the best bet for you, here are our recommended mid cap schemes. Please follow our monthly update to find out regularly how your schemes are performing.
Flexi cap schemes are typically recommended to moderate investors to create wealth over a long period of time. Ideally, one should invest in these schemes with an investment horizon of five to seven years.
Tax -saving mutual funds or Equity Linked Savings Schemes (ELSSs) help you to save income tax under Section 80C of the IT Act. You can invest a maximum of Rs 1.5 lakh in ELSSs and claim tax deductions on your investments every financial year. Are you interested?
Mutual fund advisors have been recommending balanced advantage funds (BAFs, in the mutual fund industry language) to new and inexperienced investors for a while now. These advisors believe that these schemes are ideally placed to take care of the current market conditions because of their dynamic portfolio. Advisors are also recommending these schemes to investors to park lumpsum amounts.
Arbitrage funds look for arbitrage opportunities available between the cash and derivatives markets. In other words, the fund managers in these schemes look for the price difference that they can exploit between the cash and derivatives markets. They may also invest in debt securities and equities if there are no arbitrage opportunities available in the market.
As per Sebi norms, these schemes must invest 65-80% in stocks, and 20-35% in debt. This mixed portfolio helps to deal with the market volatility better. When the equity market is in turmoil, the debt part of the portfolio softens the blow. This helps new investors to continue with their investments without worrying too much about volatility.
Large cap mutual funds are mandated to invest in top 100 companies by market capitalisation. Large companies fare better in a volatile market as these companies may be market leaders and resilient to downturns. That is why if you are looking for a relatively safer mutual fund category, you should consider investing in large cap funds.
EDELWEISS LARGE & MID CAP: It retains the large-cap tilt, with mid-cap exposure closely aligned with the minimum requirement of 35%. The fund portfolio has expanded to accommodate a higher mid-cap presence. The fund manager prefers quality businesses and avoids companies with low earnings visibility or weak managements. The fund enjoyed a strong run between 2019 and 2021, but lagged behind the index last year
Baroda BNP Paribas Large Cap Mutual Fund: The fund retains preference for businesses that are growing faster than the industry and economy, with focus on leaders or market share gainers. It places high emphasis on interplay of macro factors and sectoral impact in allocating weights. It engages in active shuffling of sectors based on views on the economy and monetary conditions.
Tata Small Cap Fund: This small-cap fund has a ‘true to label’ positioning, with nearly the entire portfolio invested in this segment. The preference is for businesses that have the potential to grow earnings at a strong pace with free cash generation. In its short running time so far, the fund has built a healthy track record, but has sharply lagged its index over the past year
Tata Large Cap: The portfolio is well diversified, with focus on bet sizing to make most of the winners and reduce damage from losers. The fund’s track record is patchy, exhibiting alternating bouts of outperformance and underperformance over the years. Should you invest in this large-cap fund?
KOTAK TAX SAVER FUND: This fund has a large-cap bias like many of its peers, with a modest presence in both mid- and small-cap segments. The portfolio is well diversified, with healthy exposure in its top bets. The fund manager is comfortable taking high active positions in individual bets. Should you invest in it?
