Invest Smart: How to manage your mutual fund investments in a rallying market

The stock market has been seeing a strong rally over the past few months. In fact just recently, the Sensex touched a new peak. The big question now is, how should you manage your mutual fund investments? Is it time to rebalance portfolios or is it time to book profits?

This is not the time to book profits, says Shweta Rajani, Vice President - Mutual Fund Research at Anand Rathi Wealth. 'Markets are at a fair value currently and there is upside potential from here', she adds.

Rajani recommends that booking profits should only be done if one's desired equity allocation has been achieved. Else, investors should relook at the market cap mix of one's portfolio. If one's portfolio is large-cap heavy, she suggests increasing allocation towards small-caps.

For new investors in Mutual Funds, Rajani recommends a mix of 50% in large-caps, 20% in mid-caps and 30% in small-caps.