Question

For a moderate risk investor with a 5-year horizon, which of the following portfolio combinations is MOST appropriate?

Accepted Answer

60% large-cap equity fund + 40% short-duration debt fund — A moderate investor with 5 years suits a balanced allocation — equity for growth, debt for stability. 60% large-cap equity (lower volatility within equity) and 40% short-duration debt provides a reasonable risk-return balance. Pure equity (small-cap) is too aggressive; pure debt/overnight is too conservative for 5 years.