Subbu's Solution

Dear Subbu, I have SIPs which I expect will average out market high/lows. However I got surplus fund and I want to invest that. As per my asset allocation I have too much exposure to debt and every new investment should be in equity/ equity based MF. But at this market high I am confused if it would be wise to enter equity market now with the additional fund. What should be my strategy? Secondly I typically sell my equity funds when my goals are close and then invest them in FDs till the time of goal. But now since the market is so high, should I go and book profit or should I wait for my goal time completely ignoring market sentiment? - Swati
Ms. Swati, I am impressed with your asset allocation plans and steps you take to achieve those plans.

Since your asset allocation suggests that you need to increase your exposure to equities, you should have a plan to implement it.

Therefore on your additional investment-
One method to mitigate the risk of investing in a market which has moved up sharply in the last few months is to do a STP. You can park your additional amount in a liquid fund and then transfer every month through STP into equity fund.

Since you are underweight equities, I do not see any reason to book profits in equities. You should look at your entire portfolio to decide if any specific amount needs to be moved into fixed deposit for meeting a specific financial goal.

I have no idea about the break-up of your debt exposure. If the debt exposure is through bond funds or liquid funds, you can think of moving some money out of these funds into fixed deposit in order to meet your goals. However, when you are reallocating from liquid/bond funds into fixed deposit, please also look at your taxation impact.


Subbu's Solution is authored by I. V. Subramaniam. I. V. Subramaniam is a director of Quantum Asset Management Company Private Limited. The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. The responses are not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or units of the Mutual Fund. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.

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