Investing: Rishi Nathany

Which is better for investing: Index fund or an index-linked exchange-traded fund (ETF)?
An index fund and index ETF both track a particular index and generally give similar returns mirroring that index, barring their tracking errors. While an index ETF is listed and the units are traded on exchanges, units of an index fund are normally purchased and redeemed directly from a fund house. Investment needs should determine your choice.

I have an investible surplus of Rs 3 lakh. I may need the funds in another two years. What options can I consider in debt mutual funds?
Given the interest rate cycle is near its peak, you could consider a two-year fixed maturity plan. Alternatively, you could invest in a medium-term debt fund, which could provide possible capital appreciation, apart from interest income, once interest rates start coming down. Bond prices have an inverse relationship with interest rates and when these decline, bond prices normally tend to rise.

 

What is your view on the oil and gas sector, considering that crude prices are still high? Do you think oil & gas stocks are a good investment bet?
A growing economy such as ours will always have an increasing need for energy resources.

However, given our oil pricing and subsidy structure, oil marketing companies could continue to suffer in terms of performance due to under-recoveries, while the producers or standalone refiners, who do not have to bear this subsidy burden, could do better. Overall, the hydrocarbons sector looks poised for a decent long-term growth in our country.

I, 27, am working as an advertising executive for three years and investing steadily. To save tax, I had invested Rs 95,000 in the public provident fund, Rs 50,000 in a five-year fixed deposit and Rs 25,000 in equity-linked savings schemes last year. How can I diversify my portfolio? How should it ideally be?
You are young and I assume (in the absence of details like risk profile, time horizon and other responsibilities) you could invest for the long term. More, you could also have a higher allocation in asset classes like equities that could be volatile over the near term, but could deliver superior long-term returns compared to any other asset class.

While it is not possible to give an exact asset allocation for reasons mentioned above, you could invest 45 per cent of your money in fixed income instruments like PPF and bond funds, 45 per cent in equity mutual funds through the systematic route and 10 per cent in gold. Also, buy adequate insurance.

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The writer is CEO, Dalmia Securities. Views expressed are his own. Send your queries at yourmoney@bsmail.in