Active mutual funds: Year-end special: ‘Avoid using only active mutual funds in your portfolio’ | Jobs Vox


The year is almost over. ETMutualFunds is talking to prominent financial planners and mutual fund advisors about their experiences with investors in 2022. Also, their predictions for 2023 and tips for readers. This week we feature Vishal Dhawan, Founder, PlanAhead Wealth Advisors.
Edited interview.

ET Mutual Funds wants to know what you think about the investment space in 2022. What are your thoughts on doom and gloom in 2022 or what investors did right or wrong in 2022?
The shift to savings and investments in financial assets such as mutual funds, as investors look beyond bank deposits to gradually rising interest rates, bodes well for the long-term health of India’s equity and debt markets. It is refreshing to see the investor community’s willingness to embrace equity as an asset for long-term wealth creation and gradually move away from the commercial mindset.

The relative outperformance of equities in India, seeing positive returns in most major global markets – the corrections in the rich and emerging markets were a big boost for Indian equity investors. Indian investors will have a higher home bias relative to other global investors in our view, and this strong home bias has served them well so far in 2022. However, we believe investors should avoid exiting their international portfolios and use this opportunity to rebalance some of their equity portfolios to international markets, rather than long-term buy lows, sell highs.

Also, what do you think will be the biggest surprise in 2022? It could be an event or category that performed brilliantly or performed poorly in 2022.
In the year The interest rate hike in 2022, both globally and in India, has given debt investors a significant mark-to-market impact on their debt portfolios in India and globally. As a result, a large number of investors in debt are not comfortable with or cannot be exposed to the concept of debt market mark-ups, so they have moved towards equity by creating portfolios that are skewed towards equity. A higher level than their vulnerability suggests. In the year Holding maturity target date index debt funds started gaining popularity with the launch of Bharat Bonds in 2020. Given their exposure to highly rated bonds, they’re a great category for long-term debt investors to look at, which basically means they don’t have to worry about market-to-market influences if they plan to hold them. Anyway to maturity, and their excellent tax efficiency over bank deposits due to indexation benefits, especially for high tax bracket investors. The liquid on them, in case of an emergency, is a great addition.

Your advice to investors, especially new investors. And what mistakes should be avoided?
Start by investing in hybrid fund categories such as balanced-advantage funds so that the quantitative models these funds use to balance exposure between debt and equity can help balance the trade-off between risk and return. Avoid using only active funds in your portfolio, both in equity and debt can help reduce portfolio costs significantly, as active funds have a significant percentage exposure to indexes. Continue your long-term SIPs and don’t stop them, waiting for a market correction or past returns that don’t look healthy. SIPs work well for real long-term goals such as retirement and education for children 10-20 years into the future.

Your recommendations for reading, watching, listening to investors.
Managing your own behavior as an investor – in the short term and in the long term, can be your greatest asset. Consider reading such books
The art of thinking clearly By Rolf Dobelli and
Thinking fast and slow By Daniel Kahneman to better understand biases and protect your portfolio from the cycles of greed and fear.


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