Prajna Capital - An Investment Guide

This fund had quite a slow beginning. It didnt put in a noteworthy performance in the first three years of its launch, but has shown commendable consistency in the past three. It delivered more than the category average in bull runs and shed less than the category in bear phases. The fund plays it safe and does well. It is an open-ended scheme, with a mandate to invest 65-75 per cent in equity and the rest in debt. The fund followed this mandate at most times. The fund manager likes to have a diversified portfolio in terms of both stocks and sectors. Last year, the equity portfolio had an average of 73 stocks, but the allocation to the top five holdings was below the category average. The manager likes to invest heavily in mid- and small-cap stocks. There have been times when large-caps accounted for less than half of the equity portfolio. The fund manager plays it safer on the debt side. He sticks to high-quality, low-maturity papers, investing primarily in floating rate papers and go...

It is advisable to make bonds a part of your investment portfolio if you need a steady income stream. So lets understand what are bonds and how it can help to generate returns. Bonds were almost a forgotten word in the last few years. The stock markets were exciting and were giving anywhere between 25 to 50 percent returns per annum. Stories of investors gaining great wealth in the stock market were dime a dozen. Generating returns on an equity portfolio seemed a cakewalk. Bonds, on the other hand, did not have the same appeal. Bonds were boring during bull markets when they seemed to offer an insignificant return compared to stocks. However, with the crash in equity markets, investors saw their capital erode by almost 50-75 percent in less than six months. Scorched by the experience, investors are now looking at other options to park their surplus funds. All it took was a bear market phase to remind investors of the virtues of a bond's safety and stability. What are bonds? ...

A well-known fact about equity investments is that it doesn't rob you of your returns in the long run. In fact, equity has always been kind to those who have showed patience and the perseverance to be invested during tough times. While such a strategy is gainful in the long run, it also needs a careful selection of funds. Diversification of risk among different schemes is an unwritten rule for a perfect investment strategy. In addition, one has to follow a few tips for building a good equity portfolio. Diversify according to risk appetite While diversification is a prerequisite, divide your portfolio according to your risk appetite and investment horizon for the portfolio. For instance, splitting the corpus among five diversified funds will be meaningless as all funds will have similar investment strategies. Hence, diversification has to be according to your needs. One of the smarter options could be to divide the portfolio into short-term and long-term, and then choose funds accor...