Have Rs 10 lakh to invest for 3-5 years? Here’s how to structure your mutual fund portfolio

Are you planning to invest Rs 10 lakh for the next three to five years and wondering where to invest in the current market scenario? Here’s a portfolio mix recommended by Ganesh Mohan, Managing Director, Bajaj Asset Management, as reported by ET Wealth.

Multi-asset investing is becoming increasingly relevant as no single asset class outperforms across every market cycle. While there is no one-size-fits-all allocation, our research suggests that a portfolio comprising around 70% equity, 20% debt and 10% commodities offers an attractive balance between risk and return for a typical retail investor, Mohan said.

For high-value investors, diversification can be expanded further through products such as Specialised Investment Funds (SIFs), Portfolio Management Services (PMS), Alternative Investment Funds (AIFs) and international equities, Mohan said.

The first-quarter earnings season has been broadly encouraging. Capital goods, diversified financials, metals and mining, telecom and auto-related sectors have delivered healthy results.
Despite higher input costs, auto companies have performed well, while higher commodity prices have supported metals and mining. Telecom earnings have also benefited from rising average revenue per user.

FMCG (fast-moving consumer goods) and IT (information technology) services have remained relatively subdued, although early signs of improvement are beginning to emerge in both sectors.

A prolonged conflict in the Middle East could push up crude oil prices, weaken the rupee and widen India’s current account deficit.
Another concern was the monsoon and the possibility of El Niño affecting rural demand. Fortunately, that risk appears to have moderated and, so far, rural demand has remained resilient.

Opportunities exist across all market-cap segments, but investors need to adopt a bottom-up approach. One way to participate across these opportunities is through a good flexi-cap fund with meaningful exposure to large-, mid- and small-cap companies. A well-diversified flexi-cap portfolio can provide balanced exposure across these segments.

Mohan said he is more constructive on gold than silver. Silver is both a precious and an industrial metal. While it can deliver stronger rallies, its demand is relatively more speculative, making it more volatile than gold.

Mohan said there are currently better opportunities at the shorter end of the yield curve. Longer-duration bonds could remain under pressure.