Dhirendra Kumar explains the importance of asset allocation and rebalancing portfolio
As equity markets have been rising, there is a need for rebalancing. Where shall I invest my liquidated equity funds for asset rebalancing?
Yes, since equity markets have been on the rise, your target asset allocation may have dwindled, and thus there is a need to rebalance your portfolio. You can consider shifting to fixed-income options. While these will not deliver any extraordinary returns, they can protect your investments from any significant market crash or even regret that comes with it.
You can shift this amount to short-term debt funds. Even a good fund among the short-duration category may only give about 6 per cent in this low-yield environment. Anything more than this will be on account of the fund taking on some risk. Having said that, you shouldn't get venturesome with your debt investments. The reason is, your money here can go for a complete toss in case of a downturn. With fixed income, your priority should not be generating returns. If you want to take a risk for higher returns, do so by taking equity exposure, not debt.