Sep 23, 2024 09:50 AM IST
Radhika Gupta recommends investors adopt an 80-20 portfolio strategy, with 80% in stable ‘dal chawal’ funds and 20% in thematic options.
Radhika Gupta- Edelweiss Mutual Fund CEO- advised that all investors must design portfolios like an Indian ‘dal chawal thaali’- 80% in stable funds and 20% in thematic ones as she talked about the imporance of having balanced investments. Talking about ‘dal chawal’ mutual funds, a term that has been coined by her, she said that investors must keep 80% of their ‘thaali’ portfolio in ‘dal chawal’ funds and the remaining 20% with pickle and ‘papad’ or thematic funds.
This is because ‘dal chawal funds’ are not restricted to market caps which gives investors freedom to choose products. These include multi-caps, flexicap, hybrid, balanced advantage and index funds.
Radhika Gupta told Economic Times, “So as India’s capital markets evolve, product complexity and variety is increasing significantly. And if you see a lot of young people and HNIs believe that now that they are rich they are not going to eat ‘dal chawal’ (rice and lentils) and will have sushi. But then once you start having sushi you realise it’s a little too much to digest. So then you go back to your old diet. Dieticians recommend eating what you grew up eating. There is a similar analogy in investing as well.”
She added, “I always say that dal chawal investing is an 80-20 balance because if you tell a young person to not ever go out to a restaurant or order from a food delivery platform, they will shoot you. But 80-20 is a very good balance. So, 80 is your home food and 20 is outside experiments. You value home food and keep life interesting. I have become a more firm advocate of this in the recent past because product complexity has gone up so much. You see so much action in SME IPOs, F&O segment, online training scams, etc.”
Explaining these funds further, she told the outlet, “Your dal chawal can be dal roti or rasam rice or whatever you grew up doing and whatever suits your diet. But do things that are easy to digest. I believe that like dieting, investing is very personal. So, 60-40 equity-debt could be okay for me and 90-10 equity-debt could be okay for you and 100% equity could be okay for someone else.”