Stock Analysis, IPO, Mutual Funds, Bonds & More

Don’t jump around, 4-5 funds can fulfil needs of most investors: Dhirendra Kumar

Despite the bad news coming in January on account of all the blows that fixed income funds witnessed, these have not faced any calamity and rather managed to get massive inflows, says Dhirendra Kumar, CEO, Value Research.

ET Now|
Last Updated: Feb 10, 2020, 07.21 PM IST
Dhirendra Kumar2-1200
Which category is seeing the most buoyant flows as well as investor interest right now? Are you seeing any sign that investors have matured in the last couple of months when despite difficulty, fund flows did not halt big time?
No, I do not think the real reason is maturity of investors. It is more because of a lot of investors coming in and signing up for SIPs and that flow sustaining. People did not jump around that. The significant flows as well as the growth in value came after quite a few months. A lot of investors who came in midcaps and smallcaps, saw January witnessing 6- 8% average growth in those funds. So, there was a revival in that small segment.

But the bigger achievement is that though January was a month of turmoil for fixed income funds and we have not seen any meaningful exodus. On the contrary, we are seeing cyclical flows coming back again but mostly in liquid funds, but also in other funds. That is quite an achievement that despite the bad news coming in January on account of all the blows that fixed income funds witnessed, they have not faced a calamity and rather managed to get massive inflows.

With the moderate risk appetite and in this kind of a market when benchmarks are again back to highs, broader markets have not really performed. Which would you say are the attractive areas for the category of funds? Do you think that BAF category or smallcaps or midcaps have become attractive? Or is it a multicap fund that you prefer?
There are five-six funds which fulfil most investors’ needs. If an investor is mature, having those five-six funds at all times irrespective of the state of the market makes sense. I do not think it really pays off to be jumping around different categories, depending on the state of the market.

It is very hard to do that and if you are able to do it with great confidence, you are likely to be grossly wrong. Somebody who has been in the market for a couple of years should be investing in a multicap fund and small components into mid and smallcap fund. That is about it. Somebody starting out should go with balanced advantage or balanced fund which is now called hybrid equity.

If you can invest just Rs 1-1.5 lakh and avail of the 80C benefit, go for a tax saving fund. Do nothing else. Money should be in ultra short term bond fund or liquid fund. So, that is about it. These four-five categories fulfil the need of most investors without any compromise on a great opportunity.

Even if you miss out on anything tactical, that is fine because given the timeframe, most of the returns are derived from discipline, consistency and ability to stick to your plan.

Also Read

MF sale through bourses small change for industry: Dhirendra Kumar

Investors better off ignoring what’s happening in market: Dhirendra Kumar

Dhirendra Kumar on top funds for risk-averse and risk-on investors

Time to stop chasing the highest yielding bond fund: Dhirendra Kumar

Allocate 60-70% to multicap funds; smallcap funds good for investors with appetite for risk: Dhirendra Kumar

Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links

Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service