Why You Should Consider Taking Some Money Off The Table According To Kshitiz Mahajan
Some fund managers anticipate a correction in the markets as they observe a mismatch in valuation. Here's what investors can do, as the markets look frothy.
Positive inflows into equity have pushed the market to record highs in the past month. The Association of Mutual Funds of India recorded a net inflow of Rs 40,608 crore into actively managed equity funds in June.
The industry recorded its highest ever assets under management of Rs 61.2 lakh crore. Despite the positive prospects, fund managers believe that this run-up might be preceding a market correction.
It could be an opportune time to take some money off the table, according to Kshitiz Mahajan, co-founder of Complete Circle Capital.
Markets are frothy, according to Mahajan, because of the run-up in equities. This could mean that taking money out at this point in time might be a call that investors need to take if they anticipate a correction as well.
“It’s a good time to book some profit from funds that have run up without earning guidance,” said Mahajan.
He recommends that investors proceed with caution as he observes certain mismatches in valuation in some spaces specifically.
Taking money out for good is ideal but Mahajan recommends that investors park the money back in fixed income until a good opportunity comes along.
“A multi-cap fund or a balance advantage fund would be good funds to participate in,” said Mahajan. The balanced advantage funds are schemes that invest in equity, debt and other asset classes as well. These funds aim to provide better downside protection while also capturing the upside of the market.
“I don’t think the run-up that has mismatches will continue,” said Mahajan. He recommends that investors choose sectors with lower valuation mismatches if they are planning fresh investments.
“Diversified funds make a lot more sense than sectoral funds at this point in time,” echoes Trideep Bhattacharya, chief investing officer of equities at Edelweiss Mutual Fund.
Reviewing and rebalancing your portfolio and moving funds into spaces with relatively less frothing would be a good call to take at this point in time.
“Profit booking could be considered from some of these thematic funds and funds could be moved to multi-caps and flexi caps,” said Bhattacharya.
