I am not too sure about hedging MFs with derivatives. MFs are for long term, and fund managers will take care of what to buy and sell, also they may already be doing some hedging.
As far as hedging small cap stock PF is concerned, you can check the impact on your PF w.r.t Nifty’s fall, also in absolute terms, and see if by using derivatives how much of that loss can be covered. And how long you want to do this for, using weekly or monthly, how much premium would you pay for protecting the PF.
There are no derivatives available for small cap indices, although if Nifty does not work for you, you can see Nifty Midcap MIDCPNIFTY. I don’t know about the liquidity here.
| Subscribe To Our Free Newsletter |
