The fund house in its report said that over the long term, large, mid and smallcap indices are largely in line, with small caps trailing marginally. Returns have been broad-based across sectors, with more sectors outperforming the BSE 100.
Sectors such as IT, metals and healthcare have been the best performers, while banks have been the worst performers followed by oil and gas.
The fund house believes that Balanced Advantage Funds are a preferred strategy for new and conservative investors.
“Add value focused strategy as a tool to diversify or broaden core equity allocation. Small cap focused strategy for diversification remains an essential component in value “toolkit”. Time to increase equity allocation instead “Reallocate the existing allocation. Still a market, buy on downside” instead of reducing equity allocation, says Anoop Bhaskar, head-equity, IDFC AMC.
According to the report, global markets are up 28 per cent from pre-pandemic levels. Indian markets are among the best performing global markets, even ahead of the US and well ahead of emerging markets.
Despite the market rally, IDFC Mutual Fund believes that there are certain factors that investors need to be cautious of.
India’s premium in emerging and developed markets is well above historical levels. Despite a good recovery in earnings, sales growth has been sluggish.
The market has seen an extended run without any correction and that is concerning. With global volatility increasing, the chances of a correction are high. Moreover, the frenzy of IPOs and other primary issuances may drain liquidity from the markets.