NEW DELHI: Apart from remaining invested in a volatile market, investment in gold and foreign funds can hedge off inflationary pressure of currency depreciation and give returns.
“For conservative investors, gold is a good investment to beat geopolitical pressure. However, if one invests in international funds for long term, he might get a healthy net return,” Tarun Vohra of Integra Profit said. He explains that Indian mutual funds offer exposure to the markets of Japan, Europe, Greater China and the US, and that the best way to gain on the depreciation of rupee is to buy one of these funds.
The rupee has been one of the worst performing Asian currencies. A depreciating rupee boosts the returns of MFs that buy into the US stock markets as the shares are priced in dollars. In addition, US’s key indices have registered healthier growth than BSE and NSE.
On asset allocation in the domestic market, Vohra advises that if you are a risk-seeking investor, then you should have an exposure of about 40 per cent in large and mega caps, and 30 per cent each in mid and small caps. For a balance portfolio, he advises 50 per cent large cap, 20 per cent each in mid and small cap, and 10 per cent debt.
However, if you are conservative, then you should have 50 per cent exposure to equity and 25 per cent to debt and then drop to gold. Vohra says investors should not lose conviction and remain invested. “It’s a cyclic correction. Corporate earning is expected to grow 1.5-2 times (10-15 per cent) than the GDP (7.3 per cent). Market will surely give higher earnings per share in the long run.”