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Why diversification is the foundation for Wealth Creation The Thumb Rule of wealth creation says don’t put all your eggs in one basket. It restricts the damage to your financial well-being in case one asset class or instrument goes for a toss. Why to diversify our Portfolio. The basic objective of diversification is to reduce your risk by spreading to different Asset Classes. Diversification is a risk-management technique that mixes a wide variety of investments within a portfolio. Risk and Return are always goes hand in hand, though everyone would love to earn high returns without taking any risk, in real life one has to manage risk and return together. “What investors should aim is for decent returns with reasonable level of risk,” The best way to do this is by following a disciplined asset allocation strategy. Most investors tend to focus on keeping their savings in a particular investment or asset class. Asset allocation The simplest way to diversify is through asset allocation. This means spreading your investments across a range of asset classes such as stocks, debt, cash, mutual funds, bonds, real estate and gold in a systematic manner. That way, if equity markets give poor returns, you can offset it with gains from investing in fixed income and gold. The ideal asset allocation for an investor depends on the investor’s risk appetite. The higher the risk appetite of the investor the higher proportion of his investment should be in equities. In order to determine your risk appetite, you should consult an investment advisor who can guide you on the details. It is also important to remember to diversify within asset classes as well. This is especially true regarding equity investments. It is important to remember that while buying equities is an important part of a diversified portfolio, holding similar stocks is a risky practice. IT stocks had given investors great returns during the period of 2013-2015 (an annualised return of 31%). However, the performance for the sector from 2015 onwards has been negative with an annualised return of around -3%. Investors who manage their own stock portfolios need to avoid concentrating into any one particular sector or stock to avoid such a situation. Diversified equity portfolio One way to have a diversified equity portfolio is to invest through equity mutual funds. Equity mutual funds are managed by investment experts who ensure that the holdings of the fund are diversified across different sectors. By buying an equity mutual fund, an investor gets the benefit of owning a diversified equity portfolio that is also actively managed by investments experts. Diversification is a tool that helps all types of investors—from the small-time individuals to the largest institutional investors. Until a few years back, it was hard for individual investors to reliably measure whether their investments were appropriately diversified. Take Control of your FinancesClick the link & Change your Financial Life – Right Here, Right Nowhttp://www.assetplus.in/partner/sathishkumar Sathish KumarWealth ConsultantWealth Consultant | Equity Fund Manager | AuthorWhatsapp / Call –  +919841058689www.sathishspeaks.com

Investors are putting most of their money on Midcap Category. Jan 2020 alone this category has seen net inflows of 1800 Crore. ( Dec 2019 net flow was only  800 Crores ) While the fact is the mid cap valuations are very reasonable and in the last 6 months this category has produced most of the returns simple way to choose the best performing funds is to evaluate the funds on the following criteria Past Performance of the Fund Upside and Downside Capture Underlying Asset performance & Assets Under Management Equity funds do not give uniform returns, the returns are always go up and down depends on the market, economic conditions and stock selections So when the markets are doing well, the best performing funds has to capture and deliver the highest returns than the standard benchmark and on the other hand when the markets are tanking, the same fund should protect the investor’s returns from the drag down.These are the Top 4 Funds which has consistent past performance with upside return capture and downside protection too and also have a good size of Asset under Management too.  Axis Midcap FundEdelweiss Midcap FundDSP Midcap Fund But Midcap funds and its returns come always with high risk. Also investor with midcap funds is expected to stay with the investment for a long duration. Midcap may not be suitable for conservative and moderate risk investors. Disclaimer – Please consult your Investment Advisor before you make any fund decision. Also Mutual Funds are subjected to market risk, please read the scheme related document before your investments. One Call Can Change your Finance Forever – I am Reachable at 9841058689 3 Reason to choose MF against PMSWhen the markets succumbing to bear and the fall is more than 35%, does the high cost product like PMS produces better returns to investors? Or the simple Mutual Fund is good enough even for savvy investors?There are 200 Plus PMS available in the market and more than 1,10 000 cr of Assets under Management are already invested.Generally Mutual Funds are applicable to ordinary and general investors while the PMS caters to wealthy and Ultra HNI segment. ( The Minimum ticket size of PMS is 50 Lakhs ) Cost comparison of MF Vs PMSWhile MF charges 1.5% – 2% of Fixed Fund Management Charges, while the PMS charges both Fixed charge structures and performance related fee ( For PMS the Fixed fee is 1.5% to 2%, with the 15 – 20% Performance related fee in excess of 10% Hurdle )Also the investor have to bear the De mat Charges ( Because the PMS needs a De Mat account ) Risk AbilitiesThe most significant difference is between MF and PMS is in the portfolio construction, while PMS is a concentrated portfolio ( 20 handpicked and high conviction funds )  where MF is a Well diversified portfolio ( 50 – 60 Diversified companies )Hence PMS naturally carries a larger risk than MF portfolio. Comparison on PerformancesBoth the MF and PMS shows the corrections and appreciations for their schemes on same level. Investor generally holding more than 5 – 6 schemes holding 100 – 120 stocks, hence there is a possibility of dilution on returns. But when you invest in 2 High performing funds in the respective category, the returns are on par with PMS. Best Performing funds like Axis Bluechip and Axis Midcap Funds have given returns at par with best performing PMS Source – ET Wealth, PMS AIF. ConclusionDespite different investing approaches and fee collected, the performances are not that different. Never choose a PMS over MF unless you have very high exposures on MF. An investor has to have sufficient exposure on MF. Opt for PMS only if you have a large portfolio in MF.  Also the PMS needs higher risk appetite and exposure. Client needs to understand the lock in period and exit loads before he signs up the PMS. Having the combination of both MF and PMS are advisable. To buy my book Untold Wealth Secrets – Click here and complete your purchasehttps://www.flipkart.com/untold-wealth-secrets/p/itmdf470e16874ad?pid=9789389080223&cmpid=product.share.p *Click the link to consult the best performing Mutual Funds* *Change your Financial Life – Right Here, Right Now* http://www.assetplus.in/partner/sathishkumar Sathish KumarEquity Fund Manager | Wealth Consultant | AuthorEmail: creatingwealthadvisory@gmail.comWhatsapp / Call –  +919841058689http://sathishspeaks.com/