Would you recommend Small case or Mutual Funds for lumpsum short term investment for 6 months

Stocks
1

Hi Guys,

If planning to invest a good amount say 10 lakhs for short term (6 months) would you prefer smallcase or Mutual funds, which is best for this scenario. If there’s is better investment plan then please share.

Thanks

2

Hi there! For the short term (<1 year time periods), investing into equity-only mutual funds/smallcases would entail some risk

You can try mutual funds/smallcases with some fixed income/debt exposure (liquid funds, balanced funds) to diversify across asset classes & reduce the risk

We have a smallcase - All Weather Investing - that gives you equity, gold & fixed income exposure with ETFs. Equity is given by the top 100 stocks (2 ETFs), gold with Gold ETF & fixed income w Liquid ETF (FD like rates) - you can read more about the smallcase here smallcase.com/awi to see it’s characteristics - very low volatility, stable returns & minimal fees

This blogpost https://blog.smallcase.com/benefits-all-weather-investing/ & more here https://blog.smallcase.com/?s=all+weather also could be helpful

3

@ajax I would not recommend smallcase for this scenario. You can consider following options

Option #1
You could invest the money into Hybrid(Equity + Debt) Mutual funds, but if you are looking for very safe returns then invest the money into Debt Mutual funds but then your returns will be lower. Do not try to diversify with too many mutual funds, you could divide this money into 2-5 Mutual funds. Since most Mutual funds in one category invests in almost same stocks diversifying too much wont help, just check the holdings of any two Mutual Funds in same category to verify that. Keep in mind since your time frame is very short (6 months) any Equity investment(MF, smallcase, direct equity) might be trading lower after 6 months so you wont be able to liquidate your investments without taking losses, if that turns out to be the case.

Option #2
Alternative is to directly invest in Nifty and Gold ETFs with a proposed ratio of 70:30 or any other ratio you might be comfortable with, Gold and Nifty usually have inverse correlation so your position will be hedged to some extent, this is easiest since you won’t need to manage/track too many stocks/funds and will give you decent returns with minimum risk.