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I not too long ago identified in a video that combining lively and passive investing represents a scarcity of conviction and is a scattergun strategy. 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 strategy of Parag Parikh AMC and trusts them. He additionally likes passive investing and believes it’s robust 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 able to sit down in judgment of your investing decisions. For what it’s value, I don’t suppose you might be doing something unsuitable and might proceed (with some caveats mentioned beneath).
That stated, permit me to supply some context and generic solutions to your query. Worth investing appears fairly glamorous however is, in actual fact, far riskier than index investing. There was some social media debate on whether or not the stated fund is a worth fund or can afford to stay a worth fund at its AUM ranges.
Regardless, they’ve carried out nicely, and so long as the going is sweet, nobody will complain. Each lively fund will undergo a nasty section, and it’s a matter of time earlier than it’s the flip of the Parag Parikh Flexicap Fund. Most lively buyers fail to acknowledge this. Because you already admire passive investing, ask your self, “What’s going to I do if the fund can not beat the benchmark for a couple of years?”
When buyers say they “like” some AMC workers or “belief” the AMC, it’s nearly at all times primarily based on scant data. So, I’d counsel 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 may retire in a couple 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 affordable to anticipate their previous efficiency to repeat in future.
Due to this fact, my suggestion is to reinforce index fund weightage to any extent further. However first, ask your self for those who can deal with the FOMO on lively fund returns. When you can, then the trail is easy. You’ll recognise what I used to be referring to within the video for those who can not. 🙂
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