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Dev Ashish  |48 Answers  |Ask -

MF Expert, Financial Planner - Answered on Sep 30, 2023

Dev Ashish is a fee-only SEBI-registered investment advisor with over 15 years of active experience in the stock market. In 2011, he founded StableInvestor, a platform for personal finance and financial planning.
He provides professional fee-only investment advisory services to small and high networth individuals in order to help them achieve their financial goals.
Ashish's views are regularly published in national business publications. He has an MBA degree from NMIMS, Mumbai and also holds an engineering degree.... more
Asked by Anonymous - Sep 19, 2023Hindi
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I am planning to do sip of Rs7000 for next 15years in Mirae Asset Global X Artificial Intelligence & Technology ETF Fund of Fund and Rs 7000 in Mirae Asset Global Electric & Autonomous Vehicles ETFs FoF . Pls advise if its a good option

Ans: If you plan to invest for the long term, then it is always advisable to have your core holdings in well-diversified fund categories like largecap/flexicap funds. while having sectoral/thematic investments may work very well at times, they also come with the risk of going completely wrong. Hence sectoral/thematic investments are best avoided by most investors.

Note (Disclaimer) - As a SEBI RIA, I cannot comment on specific schemes/funds that are provided or asked for in the questions in the platform. And the views expressed above should not be considered professional investment advice or advertisement or otherwise. No specific product/service recommendations have been made and the answers here are for general educational purposes only. The readers are requested to take into consideration all the risk factors including their financial condition, suitability to risk-return profile and the like and take professional investment advice before investing.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Mutual Funds, Financial Planning Expert - Answered on May 31, 2024

Asked by Anonymous - Sep 19, 2023Hindi
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I am planning to do sip of Rs 7000 each for next 20 years in Mutual funds of Mirae Asset Global X Artificial Intelligence & Technology ETF Fund of Fund and Mirae Asset Global Electric & Autonomous Vehicles ETFs Fund of Fund .Pls advise
Ans: Evaluating Investment Choices
Investing in Mutual Funds can be a great way to grow your wealth over the long term. However, it's important to choose the right funds based on your financial goals and risk appetite.

Understanding Sectoral Funds
Sectoral funds, like the ones you mentioned focusing on Artificial Intelligence & Technology and Electric & Autonomous Vehicles, are more focused on specific industries or sectors. While these funds can offer high returns during favorable market conditions, they also come with higher risks.

Risks Associated with Sectoral Funds
Sectoral funds are highly sensitive to the performance of the specific sector they are invested in. Any adverse developments in that sector can significantly impact the fund's performance. Additionally, these funds may be more volatile compared to diversified funds, which invest across multiple sectors.

Benefits of Diversified Funds
Diversified funds, on the other hand, spread their investments across various sectors and industries. This diversification helps reduce the impact of any adverse events in a particular sector on the overall fund performance. Diversified funds tend to be more stable and less volatile compared to sectoral funds.

Investment Strategy Recommendation
Considering your investment horizon of 20 years and the risk associated with sectoral funds, it's advisable to diversify your investments. Instead of allocating the entire SIP amount to sectoral funds, consider investing in a combination of diversified equity funds.

Building a Balanced Portfolio
A balanced portfolio typically consists of a mix of equity, debt, and other asset classes. By diversifying across different sectors and asset classes, you can reduce overall portfolio risk while potentially maximizing returns.

Regular Review and Rebalancing
Regularly review your portfolio's performance and rebalance if necessary. Rebalancing involves adjusting the allocation of your investments to maintain the desired asset allocation based on your risk tolerance and financial goals.

Conclusion
While sectoral funds can offer attractive returns, they also come with higher risks. Diversifying your investments across multiple sectors and asset classes is key to building a resilient portfolio that can weather market fluctuations. Consult with a Certified Financial Planner to develop a personalized investment strategy that aligns with your goals and risk tolerance.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam Kalirajan  |5260 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Asked by Anonymous - Sep 19, 2023Hindi
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I am planning to do Sip of Rs 7000 each for next 20 years in Mirae Asset Global Electric & Autonomous Vehicles ETFs Fund of Fund and Mirae Asset Global X Artificial Intelligence & Technology ETF Fund of Fund .Pls advise
Ans: Strategic SIP Allocation in ETFs for 20 Years: Considerations and Recommendations

Investing in Exchange-Traded Funds (ETFs) can be a strategic approach to building wealth over the long term. However, it's essential to understand the implications, especially when investing in sector-specific funds like Mirae Asset Global Electric & Autonomous Vehicles ETFs Fund of Fund and Mirae Asset Global X Artificial Intelligence & Technology ETF Fund of Fund.

Understanding Sector Funds and Their Perils

Sector-specific funds, such as those focused on electric vehicles, autonomous vehicles, artificial intelligence, and technology, offer targeted exposure to specific industries. While they may seem enticing due to potential high returns, they come with inherent risks:

High Volatility: Sector funds are susceptible to fluctuations in the particular industry they track. Any adverse developments in the sector can lead to significant volatility and potential losses.

Lack of Diversification: Sector funds are concentrated in a single industry or theme, resulting in limited diversification. This concentration amplifies the impact of adverse events within the sector on the overall portfolio.

Cyclical Nature: Sector performance is cyclical, influenced by various economic and market factors. Investing solely in sector funds exposes investors to the cyclicality of the chosen industry, which may not always align with broader market trends.

Recommended Approach for SIP Allocation

While investing Rs. 7000 each month in Mirae Asset Global Electric & Autonomous Vehicles ETFs Fund of Fund and Mirae Asset Global X Artificial Intelligence & Technology ETF Fund of Fund for the next 20 years may seem appealing, it's crucial to consider the risks associated with sector funds.

Diversification is Key: Instead of solely focusing on sector-specific funds, consider diversifying your investment across a broader range of asset classes and sectors. Diversification helps mitigate risk by spreading investments across different industries and geographies.

Consider a Core-Satellite Approach: Adopt a core-satellite approach by allocating a significant portion of your portfolio to diversified equity funds or ETFs that provide exposure to the overall market. Use sector funds as satellite investments to complement your core holdings.

Regular Monitoring and Review: Continuously monitor the performance of your investments and periodically review your portfolio's asset allocation. If sector-specific funds become overweight due to market movements, rebalance your portfolio to maintain diversification.

Consultation with a Certified Financial Planner: Seeking guidance from a Certified Financial Planner (CFP) can help you devise a well-rounded investment strategy aligned with your financial goals and risk tolerance. A CFP can provide personalized advice and recommend suitable investment options based on your individual circumstances.

Final Considerations

While sector funds offer the potential for high returns, they also come with elevated risks. It's essential to strike a balance between growth potential and risk management by diversifying your investment portfolio across various asset classes and sectors.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Ramalingam Kalirajan  |5260 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 08, 2024

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Sir need your expert advice on my following SIPs 1. MA nifty smallcap 250 momentum quality 100 ETF - 10000 2. MOMOMENTUM ETF - 10000 3. MO Large and midcap - 10000 4. Edelweiss nifty midcap 150 momentum 50 - 10000 5. ITBEES - 10000 I am more aligned towards passive investment and will continue to do around 10 yrs with annual step up 10%. After that I will stop investing and have plan to take home loan of 1.2 to 1.5 cr to buy dream home and let my invested amount compound for further next 10 years.
Ans: It's great that you're investing through SIPs and planning for your future financial goals. However, it's essential to review your portfolio periodically to ensure it aligns with your objectives and risk tolerance. Here are some points to consider:

Diversification: Your portfolio seems heavily focused on ETFs tracking momentum-based strategies. While momentum investing can yield high returns, it's important to diversify across different asset classes and investment styles to reduce risk. Consider adding exposure to other sectors or asset classes like debt or international equities for better diversification.
Risk Management: Momentum strategies can be volatile and may underperform during market downturns. Ensure you're comfortable with the level of risk associated with your investments, especially considering your long-term investment horizon. Regularly monitor the performance of your investments and be prepared to rebalance if needed.
Passive vs. Active Management: While passive investing offers cost-effective exposure to broad market indices, consider the merits of active management, especially in volatile markets or specialized sectors. Actively managed funds may provide opportunities for alpha generation through skilled fund management.
Annual Step-Up: Your strategy of increasing SIP amounts annually is commendable as it helps boost savings over time and counteracts the impact of inflation. Continue to review your investment goals and adjust your SIP amounts as needed to stay on track with your financial objectives.
Long-Term Planning: Your plan to let your investments compound for 10 years after stopping SIPs and using the proceeds for a home loan is sound. Ensure you have a clear understanding of your housing finance needs, including EMI affordability, interest rates, and loan tenure, to make an informed decision.
Professional Advice: Consider consulting with a certified financial planner to review your portfolio holistically, taking into account your risk profile, financial goals, and time horizon. They can provide personalized recommendations and help optimize your investment strategy for long-term success.
Overall, while passive investing through ETFs can be an efficient way to gain market exposure, it's important to maintain a balanced approach and periodically review your portfolio to ensure it remains aligned with your evolving financial goals and risk tolerance.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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