Diversify Your Portfolio with Angel One Nifty Total Market Index Fund

You must have heard, that the markets are highly volatile and suddenly, a question pops up, What is Market Volatility? Simply put, Market volatility refers to the fluctuations in the price of assets, such as stocks, bonds, or commodities, over a short period. This can be caused by various factors, including economic uncertainty, political instability, or shifts in investor sentiment.

When the market becomes volatile, asset prices can swing wildly, making it difficult for investors to predict outcomes. Volatility increases risk and often causes anxiety among investors, but it also presents opportunities for those who are prepared. This is where diversification, a key investment strategy, becomes crucial in managing risk during uncertain times.

Diversification in Risk Management

Diversification is a strategy that involves spreading investments across different asset classes, sectors, and regions to reduce the impact of any one investment’s poor performance on the overall portfolio. By holding a mix of investments, you can lower the likelihood of your portfolio being severely impacted by the volatility of a single asset or market sector. This principle is essential during times of market volatility, where prices may fluctuate unpredictably. A diversified portfolio smooths out these swings and reduces the overall risk, providing a buffer against potential losses.

Diversification in Angel One Nifty Total Market Index Fund

The Nifty Total Market Index monitors the performance of 750 stocks across large, mid, small, and microcap segments within a single index. It includes all the stocks from the Nifty 500 Index and the Nifty Microcap 250 Index.

The Angel One Nifty Total Market Index Fund, a new scheme from Angel One MF, offers a clear example of diversification in Mutual Funds. According to the Scheme Information Document, the fund will invest in equities and equity-related securities that make up the Nifty Total Market Index, including stocks and index derivatives.

Additionally, the fund will allocate 5% of its total assets to Cash & Cash Equivalents, Money Market instruments, Reverse Repo, and/or Tri-Party Repo on Government Securities, Treasury Bills, or units of money market/liquid schemes.

Cash Equivalents refer to Government Securities, T-bills, and Repo on Government Securities with a residual maturity of under 91 days.

Conclusion

Market volatility can be unsettling, but by incorporating diversification into your investment strategy—particularly through the use of ETFs—you can significantly reduce risk and protect your portfolio from the worst effects of market swings. ETFs offer an efficient and accessible way to achieve diversification, providing investors with a broad range of exposure to different asset classes. This strategy not only helps mitigate losses during volatile times but can also enhance long-term returns by balancing risk across various markets.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.