Mutual Fund Investment Allocation Ratio Recommended For Investors With Moderate Risk Appetite

• How much risk you are willing to take’ is the crucial factor that governs your mutual fund investment choice.
  
  
• “High risk portfolios always give higher returns” is not always true, while tactical investment is the key to earn more from your investments.
  
  
• If your risk appetite is moderate, follow this ratio for best results, says Prabhudas Lilladher, a reputed broking house.
  

When it comes to mutual fund investments, no two investors are the same. Mutual funds is tricky, unpredictable and challenging even for seasoned investors. Your mutual fund investment will always have to follow your risk appetite and what you want your investment to do to you. For those with moderate risk appetite, Prabhudas Lilladher recommends the following investment ratio for getting the best results out of their investments.

Understanding tactical investing

Understanding what is tactical investing will help you fine tune your investment options and let your investment fetch the best returns for you depending on whether you wish to invest over short term or long term.

Allocating assets tactically will mean maintaining a mixture of equity as well as debt while being watchful in placing a portfolio into classes that have the best potential for gains. A tactical approach to investing in mutual funds must follow the judgment on how the economy and finance markets are performing.

Tactical investment also involve shifting the allocations within a given asset class. For instance, you may shift a portion of your investment portfolio to cover more small cap or large cap options that could present a short-term opportunity.

The tactical shifts you make in allocation can fetch you the opportunity to find more returns on your investment when you will not mind a marginal increase in risk.

Useful advice from Prabhudas Lilladher broking house for investors with moderate risk appetite

If your watchword in mutual funds investment is ‘Moderate Risk and Moderate returns’, adopt the following investment portfolio recommended especially for you.

Investors willing to take only moderate risks can benefit from long term equity gains, income generating possibility, and a stable debt investment. To be able to achieve the said results, the ideal tenure of investment must be not less than 2 years.

This investment scenario will mean you strike a perfect balance between your equity and debt exposures maintaining them at 50% : 50%.

Allocation Percentage recommended for moderate risk takers

Type of fund	Allocation percentage
Aggressive hybrid funds	50%
Large cap funds	15%
Short duration funds	20%
Dynamic bond funds	10%
Credit risk funds	5%

As per the general practice, aggressive hybrid funds are known to allocate 70% of the funds towards equity and the remaining 30% of the funds to debt. Therefore, when you allocate 50% in the portfolio, your net contribution to equity will be maintained at 35% while ensuring that 15% of the funds in the portfolio will be allocated in the realms of debt.

Funds recommended for the investment portfolio of moderate risk takers

Type of fund	Name of the fund recommended	Allocation percentage	3 year returns percentage
Aggressive hybrid funds	ICICI Pru Equity & Debt Fund (G) Nippon India Equity Hybrid Fund (G)	25 25	9.32 8.03
Large cap funds	Axis Blue Chip Fund-Reg (G) Mirae Asset Large Cap Fund-Reg (G) ICICI Pru Bluechip Fund (G)	5 5 5	19.57 15.40 12.46
Short duration funds	Franklin India ST Income Plan (G) UTI ST Income Fund-Reg (G)	10 10	7.09 2.46
Dynamic bond funds	Franklin India Dynamic Accrual Fund (G) ICICI Pru All Seasons Bond Fund (G)	5 5	7.63 6.43
Credit risk funds	Franklin India Credit Risk Fund (G) Aditya Birla SL Credit Risk Fund-Reg (G)	2.5 2.5	6.73 5.43
Performance of the investment portfolio		100