Looking for ideas to invest Rs 10 lakh this year? Here are a few allocation tips by experts

Equity as an asset class gave good returns in 2022, if not the best. However, the debt market saw heavy outflows in the backdrop of a high interest rate environment.

Entering 2023, money managers remain bullish on equities and see a plethora of investment opportunities for investors.

The view for the debt market has also improved and fund managers see a lot of attractiveness given that interest rates are expected to peak sometime later this year.

While the outlook for India remains bright, the global environment is uncertain.

The US and the UK are staring at a recession, rate hikes are expected to continue as inflation risks are far from over, and geopolitical tensions between the Ukraine and Russia remain unsettled.

Keeping the current scenario in mind, if an investor today is looking at investing Rs 10 lakh, what should the allocation strategy be?

Here are a few tips and recommendations from money managers:

Taher Badshah, CIO, Invesco Mutual Fund
Given India’s strong outperformance during 2022 and relatively premium valuations to many emerging and developed markets, I would advocate a more gradual SIP-based approach to investing in the markets at current levels.

Manoj Trivedi, co-founder, Jama Wealth
As investment advisors, we cannot recommend an allocation that works for all investors. The time horizon is critical.

Secondly, we must remember the fundamental principle of finance that risk and return go hand in hand. We are constantly trying to achieve that ideal point where the return on investment is highest.

On very generic terms, in a hypothetical and no-constraint scenario, we would invest about 55% of the available Rs 10 lakh into equities, with a bias towards large and mid-caps (40-45% in large and midcaps, balance in small caps), about 25% in GILT funds (assuming minimum 3-year horizon), and 20% in liquid funds to take advantage of any sharp fall in equities.

Sonam Srivastava, Founder and CEO, Wright Research
As 2022 comes to a close, most of the world still faces stubbornly high inflation, aggressive interest-rate hikes and geopolitical tensions.

But, Indian market already has some exciting themes emerging that can bring a lot of color to our portfolios.

While the volatile phase in the market is still not over, we are getting increasingly confident about a few themes becoming immensely strong.

Here we would recommend buying into Budget-linked sectors, manufacturing and capital goods, banks, defence, and railways, among other sectors.

We would also recommend a healthy asset allocation with allocation to bonds, gold and international stocks also included.

Mayank Mehraa, smallcase manager and principal partner, Craving Alpha
The market in India may experience a bull rally in 2023, with foreign institutional investors potentially being active buyers.

To maximize potential returns while minimizing risk, it is advisable to consider stocks with a high margin of safety, low earnings multiples, stable business growth, low float, and decent growth, which is what we offer through our CORE smallcase.

Alternatively, a portfolio of strong stocks across key sectors like our sector advantage smallcase or low-risk equity ETFs may also be good options.

It is important for investors to consider their investment goals and risk tolerance before making any decisions.

Hemant Sood, Founder, Findoc
The next 1 year is likely to be a more volatile season for the market. Can Fin Homes is the ideal midcap for investors who are looking to invest Rs 10 lakh, with a book value of Rs 40,000 crore and a market cap of Rs 6,500 crore.

As Fin Homes can provide 50% returns between Diwali 2022 and 2023, the stocks of LIC and ICICI Bank rank second and third, respectively.

UltraTech Cement can also be purchased, as its 120 million tonne capacity combined with superior pricing power indicates future tailwinds.

DLF would be a good choice for decent returns and a less volatile investment, as their debt has been reduced by 80%.

Hardick Bora & Sanjay Bembalkar, Co-Fund Managers - Equity, Union Asset Management Co
We are recommending staggered entry in equity funds over the next 6 months to take advantage of any volatility in the short term. However, the investment rationale for Indian equities remains intact given: (i) India’s attractive global positioning; India is the 5th largest economy in the world and also the 9th fastest as per the latest data from IMF and (ii) the potential start of the new CAPEX cycle to make India a part of the global manufacturing supply chain.

Having said that, we urge investors to follow their goal-based allocation strategies, guided by their ability to take risk.

During upward trending markets, investors tend to undermine these portfolio allocation guidelines and expose themselves to elevated levels of risks – which should be avoided.

Seshadri Sen, Head of Research, Alchemy Capital Management
Lumpsum amounts can be staggered to protect from near-term market volatility. We, however, recommend staggering for not more than 1-2 quarters so as not to suffer cash drag if the market rallies hard.

Santosh Navlani, chief operating officer, ET Money
Investing doesn’t follow a one-size-fits-all approach.

The exposure to equity and debt depends on an investor’s goals and risk appetite.

For investors, it’s best to stick to their asset allocation and rebalance regularly. They should avoid changing their allocation to different asset classes based on market trends.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)