Equity saving funds fall 11% in one month; Risk-averse investors need to reassess their portfolio


According to Sebi mandate, equity saving schemes must have a minimum of 65% allocation to equity and equity-related instruments (including arbitrage positions) and 10% to debt.

Risk averse or conservative investors who invested in these low risk schemes in the hope of maximising returns on investments while maintaining a smart risk and reward balance have taken a hit as the equity category has fallen by 11.37% in the last one month and -12.59% in the last three months after the stock market started reacting to the spread of COVID-19 across the globe, the Economic Times reported.

“A portfolio with 65% equity can never be suitable for a conservative investor. Sadly, there are a number of investors who pick ‘hybrid funds’ based on their past returns. Just because equity savings might give higher returns than conservative hybrid, they would pick them. Here’s where they make a mistake. But now is too late to reconsider this choice,” says Puneet Oberoi, Founder, Excellent Investment Advisors, a mutual fund distribution firm, based in Delhi.

According to the Economic Times report, HDFC Equity Savings Fund, the largest scheme in the equity savings category, has 36.1% exposure to equity, and 22.7% to debt.

“I have always said that hybrid funds are not the best for investors with different goals and plans. If you can, please invest in equity and debt separately. If you have a goal less than 5 years, you can’t even afford to have 15% equity in the scheme, forget about 65%. Equity saving schemes are very wrongly perceived by many investors,” says SR Srinivasan, Founder, SriNivesh, a wealth management firm, based in Bengaluru.


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