However, broader markets still appear lacklustre with many mid and small caps trading in the red. Let’s look at the table below:

Poor show…

Data as on July 19, 2018
(Source: NSE)

Many investors are left with their portfolios  bleeding and self-proclaimed investment advisors cannot hide behind lame excuses anymore.

[Read: 7 Mistakes Mutual Fund Investors Make At A Market Peak And How To Fix Them]

The macro-economic picture and political landscape of the nation look a little shaky.

(Image source: pixabay.com)

Retail inflation has risen to 5% in June 2018, compared to 1.46% in June 2017.

Industrial activity has also started cooling off. In May 2018, 10 out of the 23 industries showed no growth or negative growth.

Global macro-economic factors aren’t encouraging either. Many nations face the potential threat of political instability. In India, the government at the helm faced a ‘no-confidence’ motion, although the votes of majority of MPs swung into the favour of the current dispensation. Many political-economic pundits are predicting this as the first sign of the discomfort the ruling party might face in the 2019-Lok Sabha elections.

Nonetheless, market valuations in India are extremely expensive, especially considering the poor growth in corporate earnings.

What should be your investment strategy to deal with such tricky market conditions?

Don’t be tensed. Generally, markets are volatile, and occasionally they are in fine fettle.

Therefore, instead of worrying about markets, focus on your financial goals and the investment plan to accomplish those financial goals. Continue to invest appropriate mutual funds in accordance to the asset allocation charted crafted for you.

[Read: Investing In Mutual Funds Can Help You Achieve Your Financial Goals]

Systematic Investment Plans (SIPs) in diversified mutual fund is the best option for equity mutual fund investors at present.

A small investment of Rs 10,000 per month in a diversified equity mutual fund every month can help you earn around Rs 23.23 lakh over 10 years, assuming 12% compounded annualised returns. And these are realistic expectations.

[Read: All You Need To Know About SIPs]

So, the question is which mutual funds should you invest in?
Selecting the right mutual fund scheme is the most critical decision in your wealth creation journey.
If you wish to learn how to select winning mutual funds, download and read PersonalFN’s guide: 10 Steps To Select Winning Mutual Funds.

And when you select winning mutual funds, keep in mind the following points to make a suitable choice:

• Consider your age, financial situation, risk profile, investment objectives, financial goals and time horizon before goals befall.

• Do not rely solely on past performance of the scheme, because it is not indicative of the future

• Besides quantitative parameters, focus on qualitative parameters

• Do not go by star ratings, since they subscribe to a one-size fits all approach

• Taking advice from SEBI registered investment advisors who back it with thorough research

[Read: 5 Bad Ways to Pick Mutual Funds – And One Good Way]

At PersonalFN, we have formulated the “core and satellite strategy” for mutual funds investors.

According to us, “Core” applies to the more stable, long-term holdings of the portfolio; while the term “satellite” applies to the strategic portion that would help push up the overall returns of the portfolio, across market conditions.

[Read: Willing To Take Some Investment Risk? Mutual Funds Are Your Best Bet] 

The ‘Core and satellite’ investing is a time-tested strategic way to structure and/or restructure your investment portfolio.

As far as your mutual fund investments are concerned, the ‘core portfolio’ should consist of large-cap, multi-cap, and value-style funds, while the ‘satellite portfolio’ should include funds from the mid-and-small cap category and opportunities funds. 

PersonalFN’s research states that 60% of the portfolio should be reserved for Core mutual funds and the balance 40%, for the Satellite mutual funds.

But what matters the most is the art of cleverly structuring the portfolio by assigning weights to each category of mutual funds and the schemes picked for the portfolio.

Here’s what goes into creating a strategic portfolio -

• The selected mutual funds should be amongst the top scorers in their respective categories. The portfolio should be built with a time horizon of at least 5 years

• It should be diversified across investment style and fund management

• Each mutual fund should be true to its investment style and mandate

• The mutual funds should be managed by experienced and competent fund managers and belong to fund houses that have well-defined investment systems and processes in place

• Each fund should have seen at least three market cycles of outperformance 

• The portfolio should contain an adequate number of schemes in the right proportion. In short, it should carry the most optimum allocation to each scheme and investment style

• The number of funds in the portfolio should not exceed six or seven

• No two schemes should be managed by the same fund manager

• Not more than two schemes from the same fund house should be included in the portfolio

Moreover, with changes in market outlook, the allocation to each of the schemes, especially in the satellite portfolio, needs to change. This will help you clock optimal returns. 

If you follow this strategy diligently and astutely structure the portfolio by assigning weights and keep reviewing them with change in market outlook, you will draw in the following benefits:

✔ Your portfolio will be optimally diversified;

✔ Would reduce the need for constant churning;

✔ The risk to your portfolio would reduce;

✔ You can benefit from a variety of investment strategies;

✔ Create wealth cushioning the downside; and

✔ Potentially outperform the market;

Isn’t that great?

Want to own an Ultimate Strategic Portfolio Ready-made Portfolio based on the core and satellite approach of investing?

Yes?

PersonalFN offers you this great opportunity:

The 2018 Edition of PersonalFN’s Premium Report, "The Strategic Funds Portfolio For 2025"

If you’re looking for “high investment gains at relatively moderate risk”, this report is extremely worthy.

In this report, PersonalFN will provide you with a readymade portfolio of its top equity mutual funds schemes for 2025 that have the ability to generate lucrative returns over the long term.

PersonalFN’s “The Strategic Funds Portfolio for 2025” is geared to potentially multiply your wealth in the years to come. Subscribe now! 

Happy Investing!

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