Investors should stop worrying on market valuations after the steady rise in capital market and focus on creating long term wealth by diversifying their portfolio with the right mix of assets.

Kalpen Parekh, Managing Director, DSP Mutual Fund, said after all the talks of markets getting overheated after the relentless rise, the Nifty is still down two per cent from the record high hit two months ago and hence the concern on valuation may vary for each investor depending on their entry point.

Equity still rules

Equity is the sole asset capable of outperforming inflation and instead of trying to time market entry points, investors should safeguard their interests by diversifying across various asset classes, he said. This was emphasised during the launch event of the fund house’s multi-asset fund, which allocates 50 per cent to domestic equity, 20 per cent to both gold and other commodity derivatives, 20 per cent to international equity, and 10 per cent to debt.

Asked whether the fund house has room to invest in international equities after the cap imposed by SEBI, he said after the recent fall in international market the fund house has about ₹300 crore leeway to invest in international equities and need not worry till the multi asset fund reaches an AUM of ₹2,000 crore. This apart, he said there is more avenues to invest in international equity through ETFs.

Temporary price fluctuations distract most investors from staying invested and to offer a solution which reduces fluctuations by increasing the number of asset classes, he said.

Though the fund will not get equity taxation benefit, investors should take advantage of cycles of each of the asset class and eventually stay invested in the fund for longer due to lower fluctuations as against a single asset class, said Parekh.

Meanwhile, Groww MF (formerly Indiabulls MF) has filed papers with SEBI for launching Nifty Total Market Index Fund, an open-ended scheme replicating Nifty index.

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