Risk=medium to high means I need to have eye on mutual fund whether they are declining or flourishing Risk=medium or low means don't need to have eye over them but yeas checking them every month end

Ans: You may consider the below funds:

a)   UTI Flexi Cap – Growth

b)  Parag Parikh Flexi- Cap Growth

c)   Axis ESG Equity Fund – Growth

d)  DSP Mid Cap Fund – Growth

Ans: Hi Udayakumar, thanks for writing to me. Please state your objective and holding period for me to advise you better.

Ans: Ah, mutual funds! A great way to navigate the market, but like any good adventure, there's always a bit of risk involved. So, how do we gauge this risk? Well, imagine you're setting sail on a ship – wouldn't you want to know if it's built for calm seas or choppy waters?

Here's your captain's checklist for mutual fund risk:

The Portfolio's Compass: What kind of stocks or bonds does the fund invest in? Large, established companies are generally smoother sailing than smaller, high-growth ones.
The Market's Current: Different sectors can be more volatile than others. A fund heavily invested in technology might experience bumpier rides than one focused on consumer staples.
The Historical Charts: How has the fund performed in the past? Just because it's been smooth sailing recently doesn't guarantee calm seas ahead. Past performance isn't always a perfect indicator, but it can be a helpful clue.
These are just a few indicators, and remember, a good map (your investment plan) and a trusty advisor (a Certified Financial Planner) are crucial for a successful voyage!

Ans: Assessment of Current Investments
Your mutual fund portfolio is diversified across different market capitalizations. This diversification reduces risk. The inclusion of small-cap, mid-cap, and large-cap funds is commendable.

Risk Evaluation
Small-cap and mid-cap funds have higher volatility. This can lead to significant gains but also substantial losses. Given the market falls, these funds may experience short-term declines. However, they hold potential for long-term growth.

Market Conditions
Market falls are temporary. They present opportunities to invest at lower prices. Staying invested during downturns can lead to substantial future gains.

Importance of Diversification
Your portfolio covers various market segments. This reduces the impact of poor performance in any single segment. Diversification is a key strategy for managing risk.

Actively Managed Funds vs Index Funds
Actively managed funds aim to outperform the market. They have fund managers who make strategic decisions. This can potentially lead to higher returns compared to index funds, which only replicate the market.

Index funds, while lower in cost, often provide average returns. They may not capitalize on market opportunities. Actively managed funds have the potential for better performance through strategic investment choices.

Regular Funds vs Direct Funds
Regular funds involve investing through a Certified Financial Planner. This provides professional guidance. It helps in selecting the right funds based on market conditions and personal financial goals.

Direct funds, while lower in cost, lack this professional guidance. This can lead to suboptimal investment decisions. Investing through a CFP ensures that your portfolio is well-managed and aligned with your goals.

Rebalancing and Review
Regularly reviewing and rebalancing your portfolio is crucial. It ensures that your investments remain aligned with your risk tolerance and financial goals. A Certified Financial Planner can assist with this process, providing expert advice.

Financial Goals and Time Horizon
Your investment strategy should align with your financial goals. Consider the time horizon for each goal. Long-term goals can accommodate more risk, benefiting from the higher returns of small-cap and mid-cap funds.

Final Insights
Your portfolio is diversified, which is good for risk management.
Small-cap and mid-cap funds are volatile but can offer high returns.
Market falls present buying opportunities.
Actively managed funds can potentially outperform index funds.
Investing through a Certified Financial Planner provides professional guidance.
Regular portfolio review and rebalancing are essential.
Align investments with financial goals and time horizon.
Staying the course during market volatility and leveraging professional guidance can enhance your investment outcomes.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in