The Mutual Fund Show: How To Rebalance The Portfolio Amid Yen Carry Trade Impact

Several global factors have triggered a volatile day for domestic markets. There is much confusion and concerns regarding the next move of the investor.

Some investors may be looking to buy on dips, while others might be considering rebalancing their portfolio, and moving funds to safer bets amid volatility.

“Disciplined investors, who have a systematic investment plan, need not be worried about deep cuts in the market,” said Hemant Rustagi, chief executive officer of Wiseinvest.

Volatility triggered by global cues are natural in market cycles and Rustagi suggests that investors with balanced portfolios can simply wait the volatility out.

For investors willing to rebalance their portfolio to suit the turbulent times, they can focus on moving funds out of certain volatility-prone funds.

“It’s a good time to book profits and exit from small-cap if you have significant exposure. One can add flexi-caps or large caps,” said Pankaj Mathpal, founder and chief executive officer of Optima Money Managers.

If the investor who is familiar with market cycles and volatility wants to invest into themes, Mathpal recommends healthcare and consumption sectors. Investors should pick up themes that have not had as much run-up as defence or public sector undertakings.

Since the dip is triggered by global factors, it is difficult to predict the pace and timing of the market recovery. Investors need to ensure that they stay invested, adjusting their portfolio to their long-term goals and continue their SIP, according to Rustagi.

For investors looking to move their funds to safer bets amid the volatility, there are a few avenues where the funds may have better protection than others.

The suggested avenues from Rustagi are liquid funds. It is important to understand that investors will need to wait and watch before they make a move, he added.

It is difficult to time a market correction and anticipate the degree of correction, especially in scenarios that are triggered by global factors, according to Rustagi.

Other avenues for investors include balanced advantage funds, conservative hybrid funds and equity saving funds, according to Mathpal.