Volatile market: Get Radhika Gupta's investment tips here

Radhika Gupta of Forefront Capital Management spoke to CNBC-TV18 about her views on investment strategies.

Gupta said, "One has to think about what kind of risk each investment involves. The biggest thing one can do is diversify one’s portfolio into different asset classes." Below is the verbatim transcript of the interview Q: Which is the best way to invest while insulating your portfolio in uncertain times? What are your recommendations in terms of dos and don’ts? A: People have become more and more concerned about risk. So, when one looks at investing in any financial product, this is something we have to learn, is that one should evaluate explicitly what the risk of the financial product is just outside the return potential. So, we always look at what kind of return we can earn from the investment. One has to think about what kind of risk each investment involves. The biggest thing one can do is diversify one’s portfolio into different asset classes. Just holding fixed income and equities is not adequate. One needs to add a component of commodities. For instance gold, if one can add alternative asset classes - that’s also particularly useful. Different asset classes perform at different times. If you combine a lot of unrelated asset classes - that’s the best way to protect your portfolio in difficult times. Q: Is it better to invest when markets are uncertain and invest in risky assets because markets are highly uncertain? A: There are two sides to the coin. One is that - the best investments and the most risky investments made at a market low tend to do the best for investors because you are taking risk when no one else is taking it. What I would do is I would keep 80 percent of investor’s portfolio towards long-term investments, especially if you are a retail investor. Do not worry about timing those investments and do those investments in an SIP manner. So, come up with an asset allocation in equities, debt and gold and just stick to it and continue to SIP and manage your volatility. The balance 10-20 percent, I would keep some surplus cash to invest in sort of risky opportunities that one can pick up in very volatile times. So, if you want to invest in an art fund or something more exotic or an alternative fund or hedge fund or whatever it is, put a small percentage of your portfolio always in cash to take advantage of good opportunities in volatile markets. Q: How do you make an investment in a hedge fund? Are there any recommendations? A: SEBI has issued a new guideline under the Alternative Investment Funds Regulations that was put out in July of this year opening Category III funds. So, they are available for investors at a certain ticket size.