Last Updated on Mar 9, 2023 by
As the festival of Holi is here, the atmosphere is full of anticipation, joy, and excitement. The colourful environment around us brings back fond memories of picking a favourite colour and smearing it on our loved ones; or of happy, colourful ‘barely’ recognisable faces digging into some festive sweets or smiling up at a camera.
Colours have always held a significant place in our lives. How often have our outfits been inspired by the way we are feeling?! Each colour, in its different shades and hues, has the potential to evoke a completely different feeling among individuals. The same principle applies to investments as well. Each asset category has the potential to deliver a different value to an investor’s portfolio. Like Holi is incomplete without all colours coming together to spread their joy, a mutual fund portfolio is incomplete without a careful assessment and inclusion of various asset classes that come together to build an investor’s wealth creation journey.
This Holi, let’s undertake an exciting exercise here and aim to assign a different colour to each investment category and dissect its various benefits:
Orange | Equity funds’ rewarding potential
Orange is the colour of enthusiasm and excitement, which may make it a perfect representation of equity mutual funds. Equity mutual funds invest primarily in stocks of companies listed on stock exchanges. These funds are ideally considered by investors with a relatively higher risk appetite and a longer investment horizon. While temporary fluctuations may result in volatility in an investor’s portfolio, investors still tend to invest in this category due to the promise of exposure across market caps (large, mid and small) and demonstrated performance history in the long term.
Green | Fixed income’s penchant for capital preservation
The colour Green has been known to bring a sense of security and calm to people. Fixed Income strategies could play an instrumental role as the bedrock for creating resilient portfolios that offer a sense of stability. The ability of Fixed Income to act like ‘portfolio stabilisers’ is primarily the result of duration, which measures the sensitivity of bonds to interest rates that correlate with economic cycles. This stability can enable an investor to rebalance, take advantage of market cycles, and consequently achieve long-term investment goals.
Yellow | Hybrid fund’s capacity for balance
Yellow is the colour of sunshine and overall joy, making it an ideal representation for hybrid mutual funds. A hybrid mutual fund is a category of mutual fund that invests in more than one asset class in a single product. Since diversification is at their core, these funds are typically equipped with an all-weather, long-term investing solution. They usually have lower downside risk and are relatively less volatile in nature, thereby reducing the risk of over-exposure to one asset class.
Blue | Passive fund’s aptitude for comfort
Blue is often considered one of the most comforting colours. As passive funds tend to replicate the performance of a market index, they are relatively more comforting to investors wary of volatility or the risk of bias stemming from an actively managed fund. Buoyed by several incentives such as market-linked returns, minimum tracking error, diversification, and transparency in portfolio composition, investors are looking at passive products with a new sense of vigour. In addition to multiple index funds, this universe is armed with several sectoral ETFs as well that allow the investor an all-encompassing diversified portfolio cutting across sectors, geographies, and sometimes, even industries.
Purple | International fund’s global potential
Often, representative of luxury, panache and elegance, the colour Purple is an ideal symbol for International Funds. One can invest in International Funds through the Fund of Fund (FoF) option in India. These funds tend to invest in some of the top global brands that investors may not always have direct access to on our domestic exchanges. For investors seeking to diversify across different geographies and economies and with a higher risk appetite, international funds have the potential to provide exposure to niche sectors and industries, a hedge against currency risk, and be rewarding to the long-term investor.
This year, Holi is all about diversifying your portfolio and making it more vibrant. By investing in various asset classes through mutual funds, investors can aim to create a well-rounded portfolio that suits their risk appetite and financial goals. Just as the myriad colours of Holi make the festival so special and enjoyable, let’s aim to apply the same lesson to our investments. You can use Tickertape Mutual Fund Screener to find the different types of mutual funds available in the market and filter them using 50+ filters.
Happy Holi and Happy Investing!
Disclaimer: This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The material is prepared for general communication and should not be treated as a research report. The data used in this material is obtained by Axis AMC from the sources which it considers reliable.
While utmost care has been exercised while preparing this document, Axis AMC does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.
Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC). Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.
Past performance may or may not be sustained in the future.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
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