Dhruva Raj Chatterji, Research Manager, iFAST Financial India talks to Puneet Wadhwa on different investment strategies and where to invest in mutual funds.
What are the key things that one should watch out for while investing in MFs?
The key things that an investor needs to watch out while investing is maintaining a well diversified portfolio and also sticking to the asset allocation plan. With the run up in equities in 2009, it is likely that many investor portfolios in mutual funds could have got skewed.
Besides this, investors need to choose schemes in the respective fund category based on the track record of the scheme vis-à-vis peer group and the benchmark index. Historical analysis shows that funds that top the charts in one year may underperform the following year. Look for schemes that provide superior risk-adjusted returns.
Given the current market scenario, what is your investment strategy?
Even with the surge in equity bourses witnessed in 2009, we are overweight on equities versus debt in 2010. With the improving macroeconomic fundamentals and improving profitability of India Inc, we feel that equity markets have good potential for an upside this year, but their upside would be limited to the highs seen in late 2007.
Within the equity space, we feel that broader markets will outperform, with mid-cap and small-cap stocks outperforming their large-cap cousins in 2010 as well.
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