With the new rules of Sebi's MF category, large cap funds have become difficult to achieve higher returns from the benchmark.
Wealth managers are now asking clients to put 25% of the equity mutual fund funds into a passive index fund. In spite of accelerating the benchmark index in the last one year, investors got very little returns from equity mutual funds. Hence, Wealth managers have made changes in their investment strategies. In the last one year, where the Nifty has given returns of 11%, large cap funds have given 6.78 and multi-cap funds have a return of 0.72%. The returns of mid-cap funds have been 8.2 per cent during this period.
Harshavardhana Roongta, financial planner, Mumbai, said, "The cost of investing in the index funds is very low. Their portfolio is also diversified. You are fully invested in the Index Fund, whereas in actively managed funds, some cash is usually held. ' Rungta advised to put 25% of the equity portfolio in an index fund. He said that 75% of the rest should be invested in large cap, multi-cap and mid-cap funds keeping the investor looking at his risk profile.
Founder of Getting You Rich, Rohit Shah said that the index funds typically work as Supplementary Strategies in the Large Cap category. Financial advisors say that the biggest asset of the index fund is its low cost. The expense ratio of the regular plan of these funds is 0.27-0.75%. At the same time, the cost of investing in actively managed regular funds is 1.5-2.25%. You can choose exchange traded funds (ETFs) which invest money in the index fund, which costs less. However, for this, you have to maintain a demat account and you will have to pay a brokerage charge while buying and selling the unit.
Financial Planners said that after deciding the rules of the category of the funds of SEBI, it has become mandatory for large cap funds to invest in 80% of portfolio top 100 market cap companies. This will not make it easier for these funds to get higher return than the benchmark index. Earlier, such large cap funds used to invest in mid-and small-caps stocks for higher returns.
Actively managed equity funds have not been able to give higher returns in the last one year because Nifty has come up with 90% increase due to RIL, HDFC Bank, Axis Bank, TCS, Infosys and ICICI Bank. The importance of Passive Funds is understood by the mutual fund houses. So they are bringing new funds into this category. Recently, Indiabulls has launched Nifty 50 ETF, DSP MF, DSP Nifty 50 Index Fund and DSP Nifty Next 50 Index Fund. SBI MF has also introduced Smart beta ETF fund, which is a mixed form of passive and active funds.
For more information Best Advisory Company in Indore
Wealth managers are now asking clients to put 25% of the equity mutual fund funds into a passive index fund. In spite of accelerating the benchmark index in the last one year, investors got very little returns from equity mutual funds. Hence, Wealth managers have made changes in their investment strategies. In the last one year, where the Nifty has given returns of 11%, large cap funds have given 6.78 and multi-cap funds have a return of 0.72%. The returns of mid-cap funds have been 8.2 per cent during this period.
Harshavardhana Roongta, financial planner, Mumbai, said, "The cost of investing in the index funds is very low. Their portfolio is also diversified. You are fully invested in the Index Fund, whereas in actively managed funds, some cash is usually held. ' Rungta advised to put 25% of the equity portfolio in an index fund. He said that 75% of the rest should be invested in large cap, multi-cap and mid-cap funds keeping the investor looking at his risk profile.
Founder of Getting You Rich, Rohit Shah said that the index funds typically work as Supplementary Strategies in the Large Cap category. Financial advisors say that the biggest asset of the index fund is its low cost. The expense ratio of the regular plan of these funds is 0.27-0.75%. At the same time, the cost of investing in actively managed regular funds is 1.5-2.25%. You can choose exchange traded funds (ETFs) which invest money in the index fund, which costs less. However, for this, you have to maintain a demat account and you will have to pay a brokerage charge while buying and selling the unit.
Financial Planners said that after deciding the rules of the category of the funds of SEBI, it has become mandatory for large cap funds to invest in 80% of portfolio top 100 market cap companies. This will not make it easier for these funds to get higher return than the benchmark index. Earlier, such large cap funds used to invest in mid-and small-caps stocks for higher returns.
Actively managed equity funds have not been able to give higher returns in the last one year because Nifty has come up with 90% increase due to RIL, HDFC Bank, Axis Bank, TCS, Infosys and ICICI Bank. The importance of Passive Funds is understood by the mutual fund houses. So they are bringing new funds into this category. Recently, Indiabulls has launched Nifty 50 ETF, DSP MF, DSP Nifty 50 Index Fund and DSP Nifty Next 50 Index Fund. SBI MF has also introduced Smart beta ETF fund, which is a mixed form of passive and active funds.
For more information Best Advisory Company in Indore
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