According to Radhika Gupta, “dal-chawal” funds are broad-based mutual funds that “span a range of sectors” and are “all-weather.” MD and CEO of Edelweiss Radhika Gupta offered guidance to people considering mutual fund investments. She suggested that those who are investing should make sure that “80 percent” of their portfolios consist of “dal-chawal funds” in a series of tweets on X (previously Twitter).

These days, it might be risky to have a portfolio full of specialized concepts that are best suited for satellite allocation. Recall that 80% of the portfolio needs to consist of “dal-chawal” funds, she stated in answer to a follower’s query. “It refers to items that are not specific themes.” It makes little difference if they are hybrid funds, diversified equity funds, active, or passive. The topic is wide-ranging and weather-appropriate.

Radhika Gupta, CEO of Edelweiss

According to Radhika Gupta, “dal-chawal” funds are broad-based mutual funds that “span a range of sectors” and are “all-weather.” “Active or passive doesn’t matter—the point isn’t a narrow theme-based fund that performs well in one cycle but not another,” the speaker remarked.

Investing in broad-based funds guarantees you’re protected through several market cycles, according to Radhika Gupta. “Sector funds are the flavor of the season,” she remarked, providing some information regarding sector rotation.

“Over the long run, most sectors’ returns are consistent with market returns,” she continued. Therefore, buying and holding a sector fund will rarely outperform the market. Long-term sectors do exhibit cycles. Therefore, if you can get the entry and exit correct, there is alpha to be produced. Difficult situation, as funding for manufacturing and defense are being launched today rather than at the bottom of the cycle categories. Also uncommon are exit calls.

“Traditional flexicap and multicap funds do not do aggressive sector rotation,” the speaker clarified. My skepticism stems from the difficulty of forecasting cycles and sector results. Contrary to popular belief, banks have not fared well since interest rates have increased. Technology performed well during the recession (which defies common sense).

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