5 tips from Radhika Gupta, CEO, Edelweiss Mutual fund, on how to navigate the curent market

The Coronavirus pandemic is dragging the markets down every day. The key index – S&P BSE Sensex – is down around 30% in a month. Obviously, many mutual fund investors worried about their investments in equity mutual funds. Radhika Gupta, CEO, Edelweiss Mutual Fund, has some tips for investors to navigate these trying times.

Radhika Gupta reiterated that the world will have a lot of black swans. While you can't predict black swans, you can prepare your portfolios better for black swan events.

Here are five points that Radhika believes one can follow to make a black-swan proof investment portfolio:


1. Cash is king: It is important to have cash to use in a situation like this. So, keep cash. You can also keep it inderictly in the form of low-risk equity funds like Balanced Advantage Funds (BAF).

2. Currency diversification matters: In times like this, not only does stocks get hit, so does the rupee. Assets like gold and international equities can really help you.

3. Liquidity: What is liquid becomes illiquid in a crisis and what's illiquid becomes very illiquid. Always insure that a part of your portfolio is liquid.

4. Leverage: Leverage makes the good times look good but it also exaggerates problems. When a stock or fund is down 50% and it is bought on margin, you know the implications can be tough. So, keep leverage low.

5. Communication is important: On a day when the markets have fallen 10%, you will want to press that trigger to redeem. Investors should talk to their advisors at this time and advisors should reach out to their clients. Positive conversations can help all of us.

"Possibly the worst thing we can do at this point is redeem our funds. Probably the most heroic thing we can do is invest more, but heroism is tough. At the minimum, let's just stay calm and stay invested," Radhika Gupta said.