Nisreen Mamaji: So, you see, generally right now, due to geopolitical unrest and spiraling inflation in developed countries, it’s had a negative effect on our equity markets. That said, you can be in stocks if your period is longer and as I just said, this lady is interested in investing for about five years. We therefore propose some strategies.
One is the dynamic asset allocation category, which I think Juzer has already explained well. So in addition to HDFC, which has an equity component of about 68% right now. We also recommend the ‘Nippon Balanced Advantage Fund’, which has equity of 41%, debt of 30% and arbitrage of around 29%. One-year returns for the entire BAF (Balanced Benefit Funds) category were not good. But if you look at the three-year category, it’s delivered at around 11.13% and a five-year CAGR is around 8.5% for Nippon, but in the last year due to the lack of opportunities Also in the Arbitrage segment, the entire BAF category did not perform well.
So another good option for the dynamic asset allocation category would be as an asset allocation fund of funds. We therefore recommend the “ICICI Pru Asset Allocator” which is 30% invested in equity and 58% in debt. So this also gives us a very good option, as it also contains around 12% gold. Thus, these three investment grade options would ensure that return expectations are met.
In the past year, the six-month CAGR was around 2.6%, the one-year is 4.3%, the three-year is 12.8%, and the five-year category is about 11% on average. But this asset allocator would have debt taxation because it belongs to the funds of funds category, so you automatically know that you will be invested for three years, and you will benefit from the advantages of indexation.
Another interesting category is a multi-asset category, which will perhaps include international equities, it could include gold, it could include rights, there you know, we recommend the ‘HDFC Multi Asset Fund’, currently the position is about 55% in stocks, 12.5% in debt, arbitrage is 12.5% and 11% gold. So this will give you exposure to various asset classes and therefore for the defensive strategy you are not entirely reliant on one asset class which you know would be risky at this point.
Now as you said his tenure is a bit longer, we can also recommend some defensive strategies and the actions themselves. A value strategy is very much in favor right now because in this kind of situation, the value categories, you know, in the next two years we expect them to perform well, also we can get a defensive category such as an FMCG or a dividend transaction category.
So in the dividend deal we recommend ‘ICICI Pru Dividend Deal’ and in FMCG also we recommend the ‘ICICI Pru’ where the returns have been in the top five. So if your tenure is longer you can look at 100% equities and the defensive sectors would be what I mentioned earlier.