The Mutual Fund Show: Long-Term Focus, Diversification Essential For Robust Returns

It is essential to consider a more extended timeframe while evaluating performance and ensure a well-rounded diversification strategy encompassing various investment styles, according to experts.

Building a portfolio involves adopting a quantitative approach to assessing funds and emphasising the importance of quality in the selection process, they said.

There is a misconception that a greater number of funds will help in diversifying one's portfolio, according to Kirtan Shah, managing director of private wealth at Credence Family Office Pvt.

From a diversification standpoint, it is crucial to ensure an even distribution across mid-, large- and small-cap investments when considering a 10-year investment horizon, Shah told NDTV Profit in an interview.

Historically, he said, an equally weighted portfolio across large, mid, and small cap segments has demonstrated lower risk and superior performance.

Assessing the performance of a fund on a point-to-point basis can be challenging. If the short-term performance is strong, it can positively impact the three-to-five-year performance, according to Shah.

Given the current market structure, Shah expects that large cap investments will outperform in 2024.

Shah's portfolio-building strategy involves incorporating large-, mid-, and small-cap funds. He adopts a value-oriented approach for large cap investments while focusing on growth and momentum for mid and small cap positions.

Mohit Gang, chief executive officer of Moneyfront, emphasised a blend of active and passive investment strategies. He expressed a preference for the NSE Nifty 50 funds for large cap exposure and showed interest in the Nifty Midcap 150 Quality 50 funds for mid cap investments.

Gang conveys a bullish outlook on the Nasdaq, anticipating a rally in the U.S. markets, particularly considering the current easing of yields.