Your Money | Structure an all-weather portfolio with mutual funds

financialexpress.com:

By Soumya Sarkar

Crafting an all-weather portfolio which can withstand market volatility is crucial for effective financial management. Mutual funds offer a versatile toolkit for constructing such portfolios. They provide diversification, professional management and accessibility to investors.

Asset allocation involves balancing risk and return, playing a pivotal role in portfolio resilience. By strategically allocating investments across asset classes based on risk tolerance, investment goals, and time horizons, investors can optimise returns while minimising volatility. Mutual funds offer a range of asset allocation strategies, including balanced funds and target-date funds, catering to investors with different risk profiles and objectives.

Diversification forms the bedrock of a stable portfolio. By spreading investments across different asset classes, industries, and regions, investors can mitigate the risks associated with individual securities or market segments. Mutual funds excel in diversification, offering access to a wide array of assets within a single investment vehicle. Whether equity funds spanning various market caps and sectors, fixed-income funds, or alternative investments, mutual funds enable investors to achieve well-diversified and resilient portfolios.

A key advantage of mutual funds is professional management. Fund managers leverage their expertise, research capabilities, and market insights to make informed investment decisions on behalf of investors. Active management approaches are particularly valuable during periods of market uncertainty, allowing managers to capitalise on opportunities and manage risks effectively. By entrusting portfolio management to seasoned professionals, investors can