Raksha Bandhan 2025: Smart Brother’s Best Rakhi Gift Choice That Beats Mithai

Traditional presents, such as clothes and sweets, are frequently chosen while celebrating Raksha Bandhan. However, think about sending mutual funds as an alternative for your sister if you want a present that will remain and provide a solid basis for personal finance. This is an investment in her well-being and financial stability, not merely a gift.

Giving her a gift of mutual funds teaches her the value of investing and saving while giving her something tangible that will not only appreciate in value over time but also allow her to be a financially independent woman, which is most necessary nowadays. So, based on an interview with Shaily Gang, Head-Products, Tata Asset Management, here's why as a brother, you should gift mutual funds over sweets as a gift of financial security to your sister this Raksha Bandhan 2025?

Mutual funds are the means to create wealth for financial security. Below are the ways one should adopt.

Take exposure to flexicap active funds in your core portfolio

There are many basic industries unique to the midcap and smallcap segments, while higher liquidity offered by large caps tends to limit the adverse impact of bear market phases. Sectors in each market-cap segment could either offer value or reflect growth at any given point in time.

If the investor is unable to decide on reallocating to various fund categories at any point in time in order to arrive at the apt allocation to market-cap segments based on valuation, the best would be to invest in active flexicap funds and multicap funds.

Sector active funds should be part of your Satellite portfolio

The idea of sector funds is also to bring out a unique portfolio, offering exposures to certain micro areas of the market, which find presence in diversified funds to a small extent. Also, some sector or thematic funds can offer exposure to low volatility and stable earnings, while certain niche and emerging themes can offer a high-risk-high-return equation.

The top 2-3 sectors and thematic funds should be looked at for investing, based on sector valuation and earnings growth in the medium to long term. Investors can look at splitting across sector active funds and passive funds.

Add Passives to your portfolio—market cap and sector

In an index fund portfolio, the index applies 2 -3 rules to a predefined universe for stock selection and weight allocation. In an active portfolio, the basis of a fund manager's decisions is the ground-up criteria.

It may be different for different stocks. Just like an investor would want to diversify amongst 2 funds, i.e. basically the judgment of 2 FMs, it would be a good idea to diversify amongst an active investing approach and a passive investing approach.

Have hybrid funds—key to manage volatility

During phases of market volatility or at points where valuations have run up, investors can increase exposure to such products. Tactical allocation calls under a dynamic asset allocation structure of hybrid mutual funds by a professional money manager, if and when required, make cash available from within the portfolio at the right time when not many investors on their own shell out cash towards correcting asset classes.

One of the reasons why investors suffer is that they move out of an asset class completely when they are faced with adverse market conditions. It is quite common to see them selling their equity investments during stock market downturns and moving out of debt during the periods when the stock market does well. Products like Balanced Advantage funds can adjust the net equity exposure levels according to the market valuations or macro indicators or both, depending on the asset allocation model each one follows.

Multi-asset allocation funds help to maintain the right balance between risk and reward in the long run. Since the money remains invested in different asset classes, investors do not miss out on sudden gains in an asset class. But one misses out when a particular asset class does well for prolonged periods.

Take some exposure to factor strategies

Not all factor strategies work all the time, nor do similar strategies work in multiple markets. Hence, it is important to invest money into strategies that are consistent & outperform the index over a longer period. In India, the Momentum strategy has outperformed broad market indices across time periods by a good margin. Momentum investing focuses on change in price or return outperformance in a pre-defined period as the criteria for stock selection.

As the price of a stock captures both the technical and fundamental aspects of a stock, the Momentum strategy blends both fundamental & technical investing without any emotional bias. As a company's fundamentals improve and earnings support, the price tends to start moving up. As earnings support, prices tend to move up further and investors start to take the same into account.

Factor space can be captured by the quality factor and the Momentum factor Index funds. This is because the quality factor tends to outperform during down market phases when the attention moves to fundamentals, while momentum tends to outperform the broader market during up market phases.

Have a combination of Gold and Silver ETFs

Gold and Silver ETFs would add true value to the portfolio, as their correlation with equities is low. One should have a combination of Gold and Silver in the portfolio as per the current market environment. Believe gold should be part of the portfolio for the longer term as a strategic asset and hedge against inflation, geopolitical developments, and currency depreciation.

Silver is a growth story for the medium term with the dual advantage of being precious and an industrial metal. The broad global economic recovery, especially from China, may boost investment and industrial demand for Silver. Sectoral demand may support Silver prices. If Silver looks undervalued from Gold / Silver ratio perspective, it would make an investment case to add Silver to the portfolio while not opting out of Gold.

Disclaimer

The views and recommendations expressed are solely those of the individual analysts or entities and do not reflect the views of Goodreturns.in or Greynium Information Technologies Private Limited (together referred to as "we"). We do not guarantee, endorse or take responsibility for the accuracy, completeness or reliability of any content, nor do we provide any investment advice or solicit the purchase or sale of securities. All information is provided for informational and educational purposes only and should be independently verified from licensed financial advisors before making any investment decisions.