Samvat 2082: How mutual fund investors can tweak their investment strategy this Diwali

As Samvat 2082 begins with the auspicious festival of Diwali, many investors use this time to revisit and realign their financial strategies. While several individuals plan to begin their investment journey during Diwali, many hesitate to take the first step, often unsure about which mutual fund schemes to choose.

With Samvat 2082 approaching, ETMutualFunds asked mutual fund advisors for their advice on where one should invest now. One expert highlighted that, given India’s currently high market valuations, diversification is crucial. Investors are advised to maintain a balanced mix across equity, debt, and hybrid funds rather than chasing short-term returns.

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“Within equities, the Flexi Cap category is better suited for capturing growth while maintaining relative stability, and index funds for low-cost exposure. On the debt side, one may take debt exposure without heavier taxation through Balanced Advantage funds, conservatively managed Equity savings, Multi Asset Funds. Fund of Funds could provide exposure to fixed Income + Arbitrage instruments which are more efficiently taxed,” Vishal Dhawan, Founder & CEO, Plan Ahead Wealth Advisors, shared with ETMutualFunds.

Another expert says that for Samvat 2082, going by the valuations and uncertainty in the global markets linked to tariff wars and geopolitical situation, the investors should practice caution while investing in mutual funds.

“They should invest in a mix of largecap funds, flexicap funds which have quality stocks in small & midcap category and Multi-asset allocation funds which will give them exposure to other asset classes as well. Although sectoral and thematic funds had been very popular in the recent past, the investors should avoid taking significant exposure in that space due to concentration risk,” Pallav Agarwal, Certified Financial Planner, Bhava Services LLP, told ETMutualFunds.

With the ongoing market volatilities and investors are worried about how to proceed with their investments. Should one go with SIP, lumpsum or staggered investments now to earn good returns on their portfolios?

According to Agarwal, one should prefer investing through SIP and staggered allocation for the next 1 year, which will allow them to benefit from any volatility linked to various factors mentioned above and lumpsum investment can be done only when due to some factors markets go below their historical average valuations.Sharing similar opinion, Dhawan also recommends that given the elevated market valuations and uneven sectoral performance, a staggered or SIP-based approach is most prudent for the year ahead and for investors with larger deployable capital, Systematic Transfer Plans (STPs) or phased lump-sum investments over 3–6 months can be considered to balance opportunity and risk as this approach allows participation in potential market upside while cushioning against sudden drawdowns.

Along with exposure in domestic funds, investors also have the option to go global. funds cater to different broad international markets, commodities, foreign indices, among others. That means you should pay extra attention to your investments in international funds. Pay extra attention to which geography or indices you are investing in.

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Recently, some fund houses have stopped accepting fresh subscriptions on their international funds. Recently, Invesco Mutual Fund and Edelweiss Mutual Fund have stopped accepting fresh money and cited that this suspension is temporary in nature and will continue till the limits for investments in overseas securities are enhanced by SEBI / RBI or an increase in headroom without breaching the overseas investment limit.

As the fund houses are stopping the fresh subscription, should one go for international funds now?

Dhawan recommends that international indices, especially the US, have seen very high returns in the recent past and are currently trading at highly overvalued levels. Therefore, Volatility is expected to persist in the near term due to prevailing macroeconomic and geopolitical risks; investors should continue to consider international diversification as part of their long-term portfolio strategy.

“However, feeder funds that remain open, especially those investing in large diversified global indices (like MSCI World). Global ETFs via Liberalised Remittance Scheme (LRS) routes is another option for investors comfortable with direct international investing. Lastly, GIFT City–domiciled international funds or PMS/AIF structures, which allow USD-denominated investments, may also be looked at,” he added.

Agarwal is of the same opinion and recommends that 15-20% of the allocation might be done in these funds with a very long-term time horizon, and major investment should still be done in domestic funds to benefit from the structural and sustainable growth of the Indian economy.

A report by ETMarkets mentioned that Gold and silver futures opened with strong gains on the Multi-Commodity Exchange (MCX) this Diwali, reflecting firm global cues and robust seasonal demand. The December futures contract for gold opened at Rs 1,28,134 per 10 grams, up Rs 1,126 or 0.89%, while silver surged Rs 1,996 or 1.27% to trade at Rs 1,58,600 per kilogram.

The uptick in precious metals comes after international markets posted a steady recovery, with spot gold and silver inching higher following last week’s volatility, the report added.

Recently, these precious metals have witnessed a huge surge, so what exposure to have in precious metals – gold and silver, and what returns can investors expect?

Agarwal recommends that investors should strictly invest in precious metals by way of SIP or in a staggered manner and for a very long-term time horizon and there is no thumb rule for asset allocation in this dynamic world, however an investor may invest 40-50% in domestic equity mutual funds, 10-20% in international funds, 10-20% in precious metals and the balance in multi asset allocation funds for stability. “Investors should seek help from professionals to arrive at their ideal asset allocation for the long term.”

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Dhawan shares the performance of the gold and silver and mentions that Gold and Silver are at their all-time highs, the global commodity landscape is undergoing a structural transformation.

“In the case of performance, Gold is now outpacing every major equity market globally, and silver continues to straddle its dual identity- precious and industrial. With the gold-to-silver ratio around 80:1, silver’s pricing gap with gold remains wide compared to its historical norm of about 60:1. This divergence highlights a potential realignment opportunity if long-term trends shift back toward balance. However, one needs to keep in mind that the sharp run-up in silver in the last few months may have a lot to do with speculation rather than with the discovery of industrial and precious demand.”

Therefore, from current levels, precious metal returns may moderate over the medium term, in line with inflation and a weaker-dollar bias, after a strong multi-year run-up, Dhawan recommends.

One should always invest based on their risk appetite, investment horizon, and goals.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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