ETMarkets Smart Talk: We are reducing the allocation to mid and small caps while rebalancing gold: Roopali Prabhu

economictimes.indiatimes.com:

“Gold is an integral part of portfolios due to its lower returns correlation to other asset classes including equities. Tactically too, in our model portfolios, we are reducing the allocation to mid and small caps while rebalancing gold,” says Roopali Prabhu, Head of Products & Solutions, Sanctum Wealth.

In an interview with ETMarkets, Prabhu said: “If the risk intensifies in financial markets or geopolitical context, we will probably add some gold to our portfolios” Edited excerpts:

Indian market seems to be consolidating after hitting a high in September largely on account of global factors. What is your take?
Since the beginning of this US rate hike cycle last year, markets constantly believed that the Fed would not hike as much as they were projecting and instead would cut earlier.

However, the Fed followed through on its commentary until the recent hawkish pause. The mixed data coming from the US is now being interpreted as resilience and markets finally are realigning their rate cut expectations closer to those of the Fed.

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Expectations of rates remaining ‘higher for longer’ had a negative impact on risk appetite. Consequently, emerging market flows and price performance have been negative.

Our markets too have been consolidating after staging a 20% rally from lows of 16,900 at the end of March to a new all-time high of 20,200 in September.

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