Sagar Shinde, VP Research at Fisdom told ETMutualFunds that for FY27, SIP allocations should focus on a balanced mix led by large cap and flexi cap funds, which offer better stability and earnings visibility in the current phase of valuation consolidation.
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“Midcaps can be added selectively for growth, while small caps should be limited and approached only through SIPs due to higher volatility.”
In terms of commodities, gold can be considered (around 5–10%) as a hedge against global uncertainty and currency risks, silver can be avoided at this point, as a large part of its future expectations appears to be already priced into current valuations, limiting near-term upside, he further said.
Another expert, Arjun Guha Thakurta, Executive Director, Anand Rathi Wealth Limited shared with ETMutualFunds that investors should have a long term investment strategy in place which they will follow for the long term and can have a 55% exposure to large cap and the rest in mid and small caps.
Thakurta further said that investors can view gold as a defence asset in the portfolio, replacing debt. Hence exposure should be within the 20% allocation of debt in the total portfolio. Investment can be done through Gold ETFs. We do not recommend investing in silver due to its poor risk adjusted performance over the long term.
SIP strategy
With investors wondering whether to increase, decrease or maintain the same SIP amount and whether it is relevant to take international exposure during the ongoing geopolitical tensions, experts recommend continuing with ongoing SIPs and stepping up afterwards. Investors should avoid the mistake of cutting SIPs during volatile phases, as these periods aid long-term accumulation
Thakurta said that investors in FY26 should focus on disciplined investing and not change their strategy based on short term market movements and we recommend that 20-40% of one’s income inflows should be directed towards SIP investments, every month and if possible, stepping up your SIP every year is also an effective strategy for long term wealth creation.
He further said that international funds can offer exposure to global markets, but they do have a track record for volatility and uneven performance. Hence, investors are best avoiding relying heavily on them and they would benefit more from an SIP in diversified domestic equity funds over the long term, as they provide stronger long-term growth and better risk-adjusted returns.
To this, Shinde said that given the current market environment marked by valuation consolidation and resilient domestic fundamentals, the ideal approach for FY27 is to continue SIPs and gradually increase them rather than reduce exposure.
A limited international allocation (around 10–15%) can also be considered to diversify geographically, capture opportunities outside India, and benefit from currency depreciation. However, given the limited mutual fund options currently available, investors should be selective—evaluate the geography, underlying holdings, and strategy before allocating, and invest only if it fits the overall portfolio requirement. Alternatively, international exposure can also be explored through routes like GIFT City, Shinde further said.
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How to deal with SIPs in underperforming funds
Many mutual fund investors wonder what to do with the SIPs in the fund that are offering negative returns or are underperforming compared to their respective peers or benchmarks and when should one decide to book profits from their SIP investments.
In response to this, Shinde said SIPs in underperforming funds should not be discontinued solely based on short-term performance and if the underperformance is recent or driven by broader category trends, and the fund’s strategy and management remain consistent, it is prudent to continue. However, a switch should be considered if a fund has consistently underperformed over a short and longer period or ranks persistently in the bottom quartile, or exhibits style drift or management concerns.
He further said that profit booking in SIP investments should be guided by disciplined asset allocation rather than market timing and investors should rebalance when equity exposure exceeds their target allocation or when specific segments such as mid and small caps become disproportionately large. Gains can then be redeployed into safer assets like debt or gold, rather than exiting equity entirely.
While asking investors to define what an underperforming fund is, Thakurta said investors should look at the fund’s performance across various time periods and over the long term to see if the underperformance currently is due to market corrections, which is normal, or if the fund has consistently been in the bottom quartile of its category or failed to beat its benchmark over the long term so it is the latter, then they can consider switching.
Investors should also look at different parameters to assess whether a fund is suitable in their portfolio, such as market cap allocation, fund manager strategy, AMC track record, etc, he added.
Mistakes to avoid
Many mutual fund investors invest in any fund without realising if the fund aligns with their risk appetite, investment horizon, and financial goals. Most of them invest in NFOs or go with the options where others are investing.
While mentioning what mistakes to avoid, Tharkurta said while planning for SIPs for FY27, investors should ensure they have their investment goals in place and formulate their strategy accordingly. One of the top mistakes investors make is stopping or pausing their SIPs in times of volatility. Market swings are part of normal market cycles and investors should stay invested and not panic sell.
As a second mistake, Thakurta said that skipping SIPs is also common among investors, and instead they should prioritize investing before planning their expenses. Half yearly review of portfolio should be done to assess one’s asset allocation and goal alignment, and yearly review should be done to revisit financial goals, risk profile, income changes and tax planning. If there is any misalignment, they can bring it back to ensure it is in line with what was intended.
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Shinde said that investors should avoid common pitfalls such as stopping SIPs during market corrections, chasing recently top-performing funds, over-allocating to high-risk segments like small caps, or holding an excessively large number of funds, which leads to portfolio clutter.
He further said that ignoring asset allocation discipline is another critical mistake. Instead, investors should maintain consistency, focus on long-term compounding, and periodically rebalance their portfolios. SIP strategies do not require frequent changes; a review every six months is sufficient for monitoring, while a more detailed review and rebalancing exercise can be undertaken annually to ensure alignment with financial goals and market conditions.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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