Any money that you need in the next 3 years including emergency funds, travel, medical emergency or may be just as an alternative to bank deposits, need to be preserved in value.
Ideally, no exposure to equity should be used for this time horizon. However, you may wish to use a more AGGRESSIVE way within this time frame to reach this goal.
While you do not want to take risk with your money and preserve its value, some gains coming your way (even with volatility) are fine with you. This portfolio is meant to do that.
The portfolio consists of 2 debt funds and 1 Value oriented Multi-cap equity fund. The portfolio is appropriate for an AGGRESSIVE risk profile.
- SBI Magnum Ultra Short Term Fund – (Weightage: 35%) – (Category: Debt – Ultra Short) – It invests in highest credit rating instruments and has a relatively low cost. It has been in existence for quite some time and is a low cost debt fund option.
- Franklin India Ultra Short Bond Fund – (Weightage: 35%) (Category: Debt – Ultra Short) – It offers a unique opportunity to invest in a portfolio that is significantly built on structured credit investments, where the manager uses special mechanisms to prevent any defaults. These opportunities may not have the highest credit rating. This is an aggressive strategy which has worked over many years now.
- Parag Parikh Long Term Equity Fund – (Weightage: 30%) – (Category: Equity – Multicap) – This fund adds the equity portion to the portfolio. The fund is a go anywhere, value style fund. A third of its portfolio is usually invested outside India. It is also not averse to holding cash or investing in arbitrage opportunities when the right opportunities are not available.
The debt funds provide stability to the portfolio while the equity fund works to act as a kicker for additional returns.
Note:
- This portfolio is a tax efficient option for those investors who are in the highest tax brackets.
- There is no guarantee of returns and it could be volatile too.
- You may choose an alternative fund from the fund shortlist. You may also choose to increase/decrease the number of funds.
- Please read the factsheets and scheme information document carefully before investing in the funds.