5 Tactical Additions To Your Mutual Fund Portfolio For 2018
While large cap funds, accrual debt funds and hybrids should continue to form the core of your Mutual Fund portfolio this year, here are 5 schemes that warrant a place as tactical allocation of up to 30% of your overall investment value.
ICICI Prudential Banking & Financial Services Fund
A slew of reforms in the sector (such as the Insolvency and Bankruptcy Code and resolution of bad loans through NCLT) are likely to lend it a fillip in the next couple of years. The government's recent announcement of its 2.11 Lakh Crore recapitalisation plan augurs well for the sector too, as it'll have a direct impact on the bottom line of PSU banks over time. Since the sector tends to be volatile, a 6-9-month STP followed by a 5-year holding period is advised.
SBI Magnum GILT Fund - Long Term Plan
The recent steep rise in yields may have given a serious drubbing to long term GILT funds in 2017, but if inflation stays in check and the RBI doesn't turn severely hawkish in 2018, we may actually see yields dipping in the latter half of the year; especially as the stance of global central banks become cleared. Debt Fund Investors with a time horizon of 3 years may consider making a staggered entry into this fund over the next six months.
SBI Pharma Fund
The Pharma sector has underperformed in recent times, owing to a relentless flow of bad news for the sector. However, it's quite likely that the beleaguered sector has gone through its worst phase, and strategic changes from key players will fructify in the next two-three years. The sector's earnings growth is likely to recover from FY19E onwards. Patient value investors who are willing to wait it out and go against the grain could invest a lump sum of money into this fund.
Aditya Birla Sun Life Gold Fund
Gold is a tactical hedge against inflation and global turmoil; both risks are imminent in 2018. Gold Funds may have underdelivered en masse in the past five years, but 2018 could see a turnaround for them. ABSL Gold Fund has a low expense ratio of 0.50%, and has shown promise by outperforming other Gold Funds in the past year. Switch around 5-10% of your portfolio to it in 2018 as a hedging tactic.
Franklin Build India Fund
2018 could witness an uptick in private capex, in tandem with a broad economic revival. The infrastructure theme as a whole is likely to receive a boost. Franklin Build India Fund, with a portfolio that's nearly 70% into blue chip stocks, provides the perfect means for investors to balance the intrinsic volatility of the infrastructure theme with its growth prospects in the year ahead.
