Overwhelmed by Mutual Fund options? Edelweiss CEO Radhika Gupta says stick to ‘large and mid-cap 250 Index’ Funds

Radhika Gupta, the CEO of Edelweiss Asset Management, recently responded to a tweet by an investor named Mahesh, addressing the growing confusion among investors over the large number of index fund options available in the market. Mahesh's tweet humorously highlighted the overwhelming number of choices, listing various types of index funds, including the regular Nifty 50, Nifty 500, equal weight variants, and other market cap, factor-based, and thematic funds.

Quoting Mahesh’s tweet, Gupta offered a straightforward recommendation for those feeling overwhelmed by the options. She stated, "Since I am always talking about dal-chawal funds, if you want to pick one and only one index fund in my view: Large- and Mid-cap 250 Index. It covers the broad Indian economy with reasonable allocation to large- and mid-caps."

“Index Funds were supposed to be simple investments. Here investors are confused to choose the regular N50 or N500 OR equal weight variants of the same OR funds carved out from them OR the several factor-based variants OR other mkt cap based OR themes and sector Index Funds,” Mahesh said in a tweet.

What are Dal Chaval funds?

This advice aligns with Gupta's ongoing advocacy for what she calls “dal-chawal funds,” a term she uses to describe stable, broad-based investments that form the core of a portfolio, as opposed to niche, thematic funds that can add unnecessary risk and complexity. In previous posts, Gupta has urged her followers to ensure that 80% of their portfolios consist of such "dal-chawal" investments, emphasising the importance of simplicity and broad diversification in mutual fund selection, as per a Mint report.

Gupta also shared an anecdote about an investor who had spread ₹27,000 worth of monthly SIPs across 31 funds, with a staggering 15 of those being narrow sectoral funds. She cautioned against this approach, labelling it "a danger in these times" and reiterating that the bulk of an investor's portfolio should be in well-diversified, "all-weather" funds.