Weak rupee unlikely to hit your MF portfolio. Allocate 60% in equity-related funds

Rising bond yields are already suggesting that RBI might raise rates again in its next policy meeting by another 25 bps.

Are you worried about your mutual fund portfolio taking a hit because of rupee depreciation? Well, depreciation alone will not impact your portfolio but the rise in bond yields could impact fixed income portfolio and action on specific stocks could lead to lower net asset values (NAV) for specific funds.

But, a well-diversified portfolio is unlikely to get impacted by rupee depreciation, suggest experts. The currency touched a new low of Rs 72.67 versus USD on Monday and experts feel that it could touch levels around Rs 73/USD in the near term.

The stock market is prone to volatility as it is impacted by the macro-micro environment in which a stock operates. Rising bond yields are already suggesting that the Reserve Bank of India (RBI) might raise rates again in its next policy meeting by another 25 bps.


“In this case, optimal diversification and adopting a portfolio approach can help an investor reduce the volatility of the stock market. There is upside risk to inflation forecast. In such a scenario, rupee depreciation along with elevated crude adds risks of further rates hike by RBI. Rising bond yields is already hinting possibility of a further rate hike,” Vineeta Sharma, HOR at Narnolia Financial Advisors told Moneycontrol.


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Source: https://www.moneycontrol.com/news/business/markets/weak-rupee-unlikely-to-hit-your-mf-portfolio-allocate-60-in-equity-related-funds-2936861.html