Today, Rishi Nathany, a certified financial planner, answers your questions
Who should invest in international mutual funds (MFs)? I am 55 and only 30 per cent of my portfolio is in equities.
At the age of 55, your exposure to equities at 30 per cent of your investments does not seem to be very low since you will be retiring in a few years, though I do not know your exact situation to offer an informed opinion. Any investor in India can invest in MFs abroad, either directly through the Liberalised Remittance Scheme within certain limits every year, or through fund-of-funds in India that invest abroad. One would normally consider investing in MFs abroad if one expects those economies to do very well, wants to diversify investments globally, or is expecting the rupee to weaken further, apart from other reasons.
I have been a conservative equity investor for eight years. I have stuck to large-cap stocks and MFs. Should I include mid and small-cap stocks or funds, too? Also, does it make sense to follow FIIs' buying pattern?
I think you would have done well investing as you have been in the past eight years. Currently, there are many quality mid and small caps quoting at attractive valuations. You could consider including these in your portfolio to some extent but only after proper research. In case you do not possess the time or the skill to do so on your own, you could consider the mutual fund route. While keeping track of FII or other institutional activity is useful as a guideline, it is not advisable to blindly imitate anyone else's investment pattern.
I have not invested in tax-free bonds or NCDs till now. Does it make sense to buy these in the secondary market?
Bond yields are high and the newer issues of tax-free bonds are offering a higher coupon than those issued in the last financial year. If you are in the highest tax slab, investing in these bonds makes all the more sense, since you get a pre-tax yield of 12 per cent per annum. You could either subscribe to the primary issues coming on offer or purchase these bonds from the secondary market.
Who should invest in international mutual funds (MFs)? I am 55 and only 30 per cent of my portfolio is in equities.
At the age of 55, your exposure to equities at 30 per cent of your investments does not seem to be very low since you will be retiring in a few years, though I do not know your exact situation to offer an informed opinion. Any investor in India can invest in MFs abroad, either directly through the Liberalised Remittance Scheme within certain limits every year, or through fund-of-funds in India that invest abroad. One would normally consider investing in MFs abroad if one expects those economies to do very well, wants to diversify investments globally, or is expecting the rupee to weaken further, apart from other reasons.
I have been a conservative equity investor for eight years. I have stuck to large-cap stocks and MFs. Should I include mid and small-cap stocks or funds, too? Also, does it make sense to follow FIIs' buying pattern?
I think you would have done well investing as you have been in the past eight years. Currently, there are many quality mid and small caps quoting at attractive valuations. You could consider including these in your portfolio to some extent but only after proper research. In case you do not possess the time or the skill to do so on your own, you could consider the mutual fund route. While keeping track of FII or other institutional activity is useful as a guideline, it is not advisable to blindly imitate anyone else's investment pattern.
I have not invested in tax-free bonds or NCDs till now. Does it make sense to buy these in the secondary market?
Bond yields are high and the newer issues of tax-free bonds are offering a higher coupon than those issued in the last financial year. If you are in the highest tax slab, investing in these bonds makes all the more sense, since you get a pre-tax yield of 12 per cent per annum. You could either subscribe to the primary issues coming on offer or purchase these bonds from the secondary market.
The views expressed are expert's own. Send your queries to yourmoney@bsmail.in