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Sundaram Mutual has urged equity investors to tone down their return expectations as the markets have priced in most of the positive developments leading to the recent sharp run-up in stock prices.
In these times of high equity valuations and uncertain times, investors should consider investments in flexi funds, multi-cap and multi assets.
Sunil Subramaniam, Managing Director, Sundram Mutual said the equity markets have delivered excellent returns to investors despite the global uncertainties after pricing in all the known positive events.
In these times, investors will do well by hedging themselves against uncertainty than chasing high returns, he said at the launch of Sundaram Multi Asset Allocation new fund offer which opened for subscription on Friday.
Pockets of opportunity
However, he said, given the economic growth potential in India, there are still pockets of opportunity in equity and it should deliver mid-two digit returns, he added.
The equity markets will also benefit from the revival of private capex cycle, which is yet to take off as the capacity utilisation levels are still below the trigger of 80 per cent, he said.
The fund house has differentiated its multi-asset fund from scores of other similar funds launched by proposing to invest 65 per cent in equity and 10-25 per cent in gold ETF and fixed income instruments.
Subramaniam said gold, not only provides hedge against currency, but also performs well when economy slows down and in turn, cast shadow on equity market performance.
The allocation among the three asset classes will be held constant without taking any tactical calls, he added.
The fund’s exposure to uncorrelated assets significantly reduces portfolio downside and boosts overall performance during phases of sharp equity drawdowns.
The fund house has exempted exit load on 30 per cent of units redeemed within one year of allotment. The remaining 70 per cent of units if redeemed within one year will attract an exit load of one per cent. There will be no exit load on inter-scheme switch-outs and Systematic Transfer Plans.
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