With Mutual Fund houses redirecting their funds towards investments in medium term plans, their focus has mainly been on the liquid assets. Since, volatility can be expected in the short term market sightings, investors can gain by investing in the 1-3 year time frame through Systematic Investment Plans (SIPs).
It was considered healthy to invest a major portion of your savings in equities and a part of it in debt, but sighting the current market movements, it is highly volatile. With the unpredictable international economic conditions, coupled with high inflation scare and increase in the fiscal deficit, investing in long term debt assets like government securities, bonds, Certificate of Deposits (COD), retail non convertible debentures and debt papers of NBFCs. This is advised since, as an investor you should benefit from your portfolio in future. Try to invest in such a way that not only you are able to combat inflation in the coming 10-15 years, also, there should not be a necessity for you to opt for a debt like a personal loan or home loan in future to finance a part of your requirements.
Investors who have been investing in the US treasuries are expressing their concerns after losing the status of the world largest economy by Standard & Poor’s credit rating agency. Although it might not create a significant impact, it will affect the global market.
With the RBI cutting down the exposure towards liquid schemes, it has lost a major source of liquidity. Mostly, it has been observed that smaller funds tend to outperform the large cap funds. With the resistance of funds flowing into the small cap funds, it is definitely going to create an impact. The liquidity crunch will not affect the large cap funds is because of its large scale financial activity coupled with its size.