I have invested more than Rs 20 lakh in aggressive hybrid funds. Should I shift that money to large or multi-cap funds?
If you are a new investor, I would suggest that you should not switch to equity funds now, as there can be a downside in the market for which you will not be prepared. I would say that it takes three years for you to get familiar with the market. Many people who have seen the downfall of March 2020 believe that they have seen it all and now understand market dynamics. But this is not true. At times, the market keeps on falling for a prolonged period of time and it seems that it may never go up or goes up after a long period of time.
Aggressive hybrid funds with about 25-35 per cent of the portfolio invested in fixed-income securities turn out to be a decent hedge for a new investor. If the fund manager of these aggressive hybrid funds rebalances the portfolio in a disciplined manner to maintain the equity-debt ratio, then it will make your investment less prone to brutal market falls.
Core equity funds test your grit during market falls. For example, when the market falls down by as high 40-70 per cent, such as that of 2008, it can be very unnerving. The probability of such a fall cannot be ruled out and once in every 10 years or so, this does take place. It happened in 2008 and now in 2020.
So, I suggest you should shift to core equity funds only after investing in the market at least for two-three years.
