Thursday, April 7, 2022

What should be your mutual fund strategy in 2022 - Part II

Stay away from the hunt for high yields: Because debt yields are low, it's very tempting to buy  debt funds with higher yields. Challenges and money got stuck as they chased higher returns. Allocate only a small portion of the money to higher-yielding debt funds and be aware of the risks involved. Don't give up on gold because of its recent underperformance: gold has traditionally been negatively correlated with stocks, and as such it is  very common for gold to  underperform during periods when stocks are performing very well. It's still a good idea to invest money in gold mutual funds to protect yourself. 

The low power of the HDFC bank makes it attractive. Should I buy now or wait a little longer? The pandemic could not stop Tata Steel's dream career. War, inflation and insecurity can ruin the party. Buying on dips may not always be a winning strategy -- past experience has shown that stocks that are falling or reversing sharply can take a significant amount of time to return to their core value and then begin to generate returns . seven to ten years.

Rebalance your portfolio: Due to stocks outperforming, it can be a good idea to rebalance portfolios, reducing equity funds and adding bonds and gold funds to partially divest from high-priced assets and put money into assets that are less expensive. Increase exposure to passive funds and ETFs: As returns are expected to fall going forward, index funds and smart beta funds can seek incremental allocations, thereby reducing portfolio costs. Avoid chasing the best themes of 2021 - The top-performing themes of 2021, such as technology, are  significantly more expensive now than they have been in the past, and as such it may not be wise to look for returns there. Avoid searching for theme funds, especially ones that have performed very well in the recent past.

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