Radhika Gupta, the MD and CEO of Edelweiss, recently took to social media platform X, formerly Twitter to share an advice on mutual fund investing. In her posts, she noted the importance of having a stable, diversified portfolio, likening it to a diet of "dal-chawal," which is a staple in many Indian households.
Gupta warned investors about the risks of heavily investing in narrow sectoral funds. She shared an example of an investor who had spread Rs 27,000 worth of monthly SIPs across 31 funds, 15 of which were narrow sectoral ones. She called this a dangerous strategy, especially in uncertain times.
“A danger in these times is to fill your portfolio with narrow ideas that ideally are satellite allocation. Remember, 80% of the portfolio should be ‘dal-chawal’ funds!” Gupta wrote in her post.
What Are "Dal-Chawal" Funds?
Gupta in her post added that "dal-chawal" funds are broad-based mutual funds that span various sectors and are designed to perform well across different market conditions.
These funds include hybrid funds, diversified equity funds, and broad-based index funds, such as flexi, multi, large and mid-cap funds, as well as 250-500 index funds.
“Active or passive doesn’t matter — the point is not a narrow theme-based fund that works in one cycle and not in the next,” added Gupta.
Why Invest in "Dal-Chawal" Funds?
One of the primary reason for investing in "dal-chawal" funds is their ability to provide stability and cover through various market cycles.
Gupta also added to it the importance of diversification, using the old adage, “don’t put all your eggs in one basket.”
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Sector Funds
She also in a series of another X posts addressed the current popularity of sector funds.
Gupta noted that while these funds might align with market returns in the long run, they rarely outperform the market.
