Investors need to trim down equity allocation given high interest rate scenario: Moneyfront

In times of market volatility and rising interest scenario, many investors need to tailor a strategy to fit their needs. So, does mutual fund investments need a strategy change in such an environment?

According to Mohit Gang, CEO & Co-Founder at Moneyfront, investors should rebalance their asset allocation and trim down the equity allocation given the interest rate scenario.

Gang said, “The times in which we are living are unprecedented in many ways. We have seen a repo rate hike of almost 190 basis points in last 6 months from 4 percent to 5.9 percent. Within next 6 months, we will see this interest rate scenario really hurting each and every aspect of the economy including the corporate borrowing and the individual borrowing as well. Given this backdrop each investor will have to go back to the drawing board and look at the asset allocation once again."

Gang further recommended investors to take a cautious view of equity and trim down the equity allocation.

"I am not saying go down heavily underweight equities but just get it right and don’t go overboard right now given the rate scenario and everything else," he suggested.

Gang added that if investors want to stay with equity then they should stick to largecap stocks or move to balanced advantage mutual fund or multi-asset funds.