Today, Capital Portfolio Advisors’ MD & principal portfolio manager Paras Adenwala answers your questions
Is there any contra theme playing right now which investors can cash in on?
Industries like agrochemicals, seeds and fertilisers have corrected considerably. The valuations seem appealing at current levels. Similarly, engineering businesses, too, have underperformed due to a sluggish business environment and high interest rates. India cannot do without infrastructure and fresh asset creation, if it has to grow at seven per cent plus. Hence, sooner than later, the business environment for these companies will start turning around. However, investors would need adequate patience, to get returns out of stocks in these sectors.
What is your view on real estate as an investment avenue? Given the growth in the sector, isn't it an asset class worth investing?
Fundamentally, real estate is a good investment, considering rising population, increasing affluence and limited land area. However, it should have been bought in the right location, from a reputed builder and at the right price. Investors should also note it is not a liquid investment option. Therefore, investible funds not needed in the short to medium term should be invested in real estate.
Which is a better instrument to take exposure to gold — gold saving schemes or ETFs?
Gold ETFs are more trustworthy, as these products are offered by Sebi-regulated mutual fund houses. More, these products are much more economical and convenient as compared to gold saving schemes.
Would you suggest putting money in infrastructure funds/stocks? What are their growth prospects?
The valuations of most infrastructure stocks look quite attractive for a long-term investor. However, the sector is exposed to policy interference which increases uncertainty. However, with the interest rate cycle turning favourable and the government stance too likely to become conducive, one can surely allocate a part of the stock portfolio towards large infrastructure players. However, investing in infrastructure sector funds is not recommended, due to their unsatisfactory track record. Ideally, an equity diversified fund augurs well for investors.
How should one divide the equity portion of a portfolio into large, mid and small-cap funds/stocks? Do you suggest this division?
It depends on the amount of risk that an investor wishes to take. Mid and small-cap stocks, being more risky in nature, are only for the bravehearted who can digest volatility. Ideally, amateur investors would do well to entrust their portfolio to experienced portfolio managers, who would structure the portfolio in line with the risk-return profile of investors.
Which kind of debt funds are the best to put money in? Or, are bank deposits a better bet?
Debt funds always score over bank deposits due to their superior tax adjusted returns. Investors could consider investing in medium-term plans or dynamic bond funds, offered by mutual funds. For the more adventurous, long-term corporate bonds could also be considered.
The views expressed are the expert’s own. Send your queries to yourmoney@bsmail.in
