The Mutual Fund Show: Why Manufacturing Schemes Can Be Part Of Your Core Portfolio
Investing in manufacturing funds can aid long-term growth, given the government's focus on boosting manufacturing.
Investors must allocate a portion of their core portfolio to the manufacturing sector in the long run, as it offers a lot of scope. That’s according to Kshitiz Mahajan, managing partner and chief executive officer of Complete Circle Wealth Solutions, who referred to initiatives such as 'Make in India' and production-linked incentives to boost manufacturing.
“It can be part of your core portfolio,” Mahajan told NDTV Profit. “I’m not saying other sectors didn’t do well, but yes, there is clear-cut scope.”
Mahajan expects the manufacturing sector to grow rapidly as the government is keen on boosting its contribution to India’s gross domestic product to as much as 25% by 2025.
This will not only attract foreign companies but also boost job creation, he said. “We have enough domestic demand to meet this increase in manufacturing.”
According to Mahajan, “everyone is planning for expansion”, and there are certain gaps to be filled in this theme, that will help create growth in one’s portfolio. Around 8-10% of his investment would be in the manufacturing sector, he said.
In terms of momentum funds having only mid-cap and small-cap companies in the portfolio, Mahajan said, “It can be a tactical allocation in your portfolio, however, it is a little riskier.”
But Siddharth Srivastava, head of ETF product and fund manager at Mirae Asset, said if one is investing for over five years, then it will give “pretty reasonable returns”.
Investors must not consider such funds if their investment period is less than five years, he said, and suggested funds “leaning” towards large caps in such cases.
Query 1: I have a Rs 7,000 SIP in three funds and want to invest Rs 20,000 additionally in monthly schemes. Can you recommend a few funds? Current funds are Quant Mid Cap, Quant Small Cap, Parag Parikh Flexi Cap.
Name: Kiran | Age: 42 years
Kshitiz Mahajan: Good part is she can step-up SIP by Rs 20,000, so that goes up to be Rs 27,000 and eventually, if she can step-up by Rs 3,000 more next year, because as and when your income will grow at Rs 30,000 monthly SIP over next two years; and if her portfolio can grow at 14-15% by the time she will be 57 or 58, she can have Rs 2 crore. That is the power of compounding. It's simple rule of 15: it says Rs 15,000 SIP for 15 years at the rate 15% will yield you Rs 1 crore; if Rs 30,000, then it can give you Rs 2 crore.
Funds are a little aggressive, but looks good. I would add a couple of multi-cap or flexi-cap funds, with little inclination towards large-cap side at this level. So, that is what one should look at. One can look at ICICI Flexi-Cap, Nippon Focus is also a good fund.
One thing we look at is past performance, but one should look at the portfolio which can do well here onwards. Many large caps are lagging, banking as well as many stocks didn't get their due as per earnings. Look at it and add these 2-3 funds. She can add flexi and multi-cap fund.
The problem today is that if you are not in equity, that is a bigger problem than being in equity. If you want to beat food inflation, then only equity can beat that inflation.
