Sarbajeet K Sen

Fixed income outlook 2025: Lock into peak rates as cuts are likely

The much-anticipated interest rate cut cycle may be delayed, but experts believe the Reserve Bank of India (RBI) will reduce rates in 2025

Wait for NAV and price on exchange to converge before investing

Indian fund houses have cumulatively hit the investment ceiling set by the Reserve Bank of India (RBI): $7 billion for overseas mutual fund (MF) investments

Reducing home loan: Switch to lower-cost loan if credit profile improves

Until repo rate cuts begin, borrowers can explore other options to lower their home loan burden

Consumption funds: Strong returns await investors who can endure slowdowns

Over the past year, consumption funds yielded returns of 28.6 per cent, lower than PSU (46.4 per cent), pharma (42 per cent), infrastructure (39.1 per cent), and technology (37.8 per cent)

LDFs: Suitable for long-term investors with higher risk appetite

LDFs carry significant interest rate risks. Rapid rate increases could result in MTM losses

Investing in ETFs: Ensure low tracking error, alignment with risk appetite

Investors should approach ETFs as long-term investments and avoid frequent trading

Liquid funds: Go for fund with large AUM, high credit quality and low cost

These funds invest in money market instruments maturing in less than 91 days, including treasury bills, commercial papers issued by corporates, and certificates of deposits issued by banks

Pharma and health care funds: Defensive bets amid growing volatility

Altogether, 26 funds focused on pharma and healthcare collectively manage Rs 30,306 crore. Some of them offer exposure to global pharma stocks

For exposure to stable and resilient businesses, bet on MNC funds

MNC funds invest in companies where foreign promoters have more than 50% shareholding

Mitigate accounting, disclosure and governance risks with ESG funds

Globally, regulators, rating agencies, and institutional investors have led the charge in promoting ESG investing

Passive value funds are for investors who can face deep drawdowns

Opt for passive funds to reduce fund manager risk and capitalise on their lower costs

Lock into attractive SCSS, FD returns before interest rate cuts begin

Investors with a longer time frame will be better off investing in longer-tenured FDs

Retirement funds: Align equity-debt mix with risk appetite and horizon

Their risk-return profiles can vary widely. Equity-focused schemes may perform better in a bull market, while debt-oriented ones may offer greater stability during volatile periods

Flexi-cap funds: Smart choice amid high valuations, potential volatility

Flexi-cap funds invest across market caps without fixed allocation limits

Rate cuts and higher discretionary spending likely to boost tech funds

These schemes invest at least 80 per cent in shares of technology companies. As of August 31, 2024, 26 technology sector schemes managed assets worth Rs 45,637 crore.

Simplify your DIY portfolio management with multi-asset fund of fund

The FoF fund manager picks multiple schemes, depending on the FoF's mandate

Is your portfolio heavy on growth strategy? Add dividend yield funds

"Companies that pay high dividends typically have strong cash flows and tend to be more stable," Atul Shinghal, Founder and CEO of Scripbox, says

Allocate 5-10% to banking funds to gain from rate cuts, valuations

Since banking and financial services is a large listed space, it has 55 passively and actively managed funds. The most recent addition is Bandhan Nifty Bank Index Fund

Passive multicap funds: Low cost, broad exposure without fund manager risk

Multi-cap schemes allocate at least 25 per cent each to large, mid, and small-cap stocks, with the remaining 25 per cent invested at the fund manager's discretion

Keep bulk of your portfolio in short- to medium-duration debt funds

The Reserve Bank of India (RBI), too, left the benchmark repo rate unchanged at 6.5 per cent and kept the policy stance unchanged on Thursday