I just lately identified in a video that combining energetic and passive investing represents an absence of conviction and is a scattergun method. I cited the instance of holding the Parag Parikh Flexi Cap fund + Nifty/Sensex Index fund.
A reader holding Parag Parikh Flexi Cap Fund plus UTI Nifty 50 Index fund wrote in that he likes the worth investing method of Parag Parikh AMC and trusts them. He additionally likes passive investing and believes it’s powerful to beat the market over the long run. He desires to know if he’s doing one thing unsuitable and if he can proceed investing in these two funds.
Contemplating that my portfolio is way extra cluttered than yours, I’m hardly ready to take a seat in judgment of your investing decisions. For what it’s price, I don’t assume you might be doing something unsuitable and might proceed (with some caveats mentioned under).
That mentioned, permit me to supply some context and generic ideas to your query. Worth investing appears fairly glamorous however is, in reality, far riskier than index investing. There was some social media debate on whether or not the mentioned fund is a worth fund or can afford to stay a worth fund at its AUM ranges.
Regardless, they’ve carried out properly, and so long as the going is nice, nobody will complain. Each energetic fund will undergo a foul part, and it’s a matter of time earlier than it’s the flip of the Parag Parikh Flexicap Fund. Most energetic buyers fail to acknowledge this. Because you already admire passive investing, ask your self, “What’s going to I do if the fund can’t beat the benchmark for a number of years?”
When buyers say they “like” some AMC workers or “belief” the AMC, it’s virtually all the time primarily based on scant data. So, I might recommend investing with out emotional attachment. We should be skilled fund managers of our monetary objectives.
Individuals come and go on a regular basis. If Rajeev Thakkar quits tomorrow, fund efficiency could also be affected. In any case, he might retire in a number of years. This can be a vital threat. Contemplating their reputation – Parag Parikh Flexi Cap Fund is the preferred direct plan fairness MF – and burgeoning AUM, it isn’t cheap to anticipate their previous efficiency to repeat in future.
Subsequently, my suggestion is to boost index fund weightage any further. However first, ask your self should you can deal with the FOMO on energetic fund returns. In case you can, then the trail is straightforward. You’ll recognise what I used to be referring to within the video should you can’t. 🙂
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