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Research & Insights

Investment Strategy for Equity

Fundamentally, we believe that India is in a much stronger position when compared to other countries.

We continue to maintain our overweight position on Largecap and Large & Midcap funds as the valuation in this space still remains attractive. The Multicap funds from the Fund Selector are marketcap agnostic and have the proven track record to hand-pick good quality stocks across market capitalization. We continue to maintain our overweight position in Multicap funds.

We have remained overweight on Balanced funds right from the first quarter. These funds have outperformed the markets especially during rough phases. We continue to maintain our overweight position on this category.

Hybrid – Arbitrage funds are considered safer than balanced funds as their direct equity exposure is lesser. These funds are suitable for a holding tenure of 2 to 3 years. These funds can be an excellent alternative for debt funds (especially MIPs) that need to be held for 3 years to avail indexation benefits.

Allocation to ELSS funds is based on the requirements of individual clients and hence we maintain a neutral view on this category.

Category Current View Chola Fund Selector
Largecap Funds Overweight UTI Equity Fund, L&T Equity Fund
Large & Midcap Funds Overweight Kotak Select Focus, SBI Bluechip
Multicap Funds Overweight L&T India Value Fund, Franklin India High Growth Companies Fund
Midcap Funds Underweight Franklin India Prima Fund
Smallcap Funds Underweight Franklin India Smaller Companies Fund
Balanced Funds Overweight Tata Balanced Fund, L&T India Prudence Fund
ELSS Funds Neutral IDFC Tax Advantage (ELSS) Fund, Reliance Tax Saver
Hybrid Funds - Arbitrage Overweight Kotak Equity Savings Fund

Investment Strategy for Debt

We remain overweight on schemes where the portfolios are invested in securities with good credit quality.

Category Current View Chola Fund Selector
Short-term Funds Overweight Reliance RSF – Debt
Income Funds Overweight ICICI Pru Corporate Bond Fund

Model Asset Allocation

Asset Class Conservative Moderately Conservative Moderately Aggressive Aggressive
Equity 25% 40% 60% 75%
Debt 75% 60% 40% 25%
Total 100% 100% 100% 100%
Model Portfolio
FUND NAME Conservative Moderately Conservative Moderately Aggressive Aggressive
Equity-Large Cap Funds 10% 15% 10% 15%
Equity-Large & Midcap Funds 0% 5% 15% 20%
Equity-Multi Cap Funds 0% 5% 10% 10%
Equity-Mid Cap and Small cap Funds 0% 5% 15% 25%
Equity – Balanced Funds 15% 5% 10% 5%
Hybrid – Arbitrage Funds 30% 30% 20% 15%
Income Funds 20% 15% 10% 5%
Debt- Short term Funds 25% 20% 10% 5%
Total 100% 100% 100% 100%

Please Note:

The suggested asset allocation model pertaining to different risk profiles is given at the end of this note.Overweight, Underweight and Neutral views are based on various parameters like macro-economic factors, valuations, earnings growth etc. These are to be used for making tactical asset allocation decisions where allocations are slightly tweaked in order to take advantage of opportunities and attractive valuations. Kindly refer to the Radar for schemes that can be considered under each category.