In this latest episode of Mutual Fund Corner, CNBC-TV18’s Sumaira Abidi spoke to Anurag Seth, CEO at Aevitas Capital, to discuss tactical allocations. Seth explained that tactical allocation is an active management of portfolio strategy. Tactical asset allocation is taking an active stance on strategic asset allocation and adjusting long-term target weights for a short period to capitalise on the market opportunities.

"It is meant for investors who have complete hold on the sector. Tactical allocation becomes slightly skewed towards all those schemes that help generate alpha over inflationary scenarios and schemes that do better in the current scenario. So, it is meant for a risky client and someone who is okay to take a risk and can plan their entry and exit better,” he said.

"I would divide portfolio allocation towards strategic and, what is called sectoral or thematic. Some evergreen themes are always there—like healthcare, pharma, and some new-age companies in terms of diagnostics—to invest in. But these two themes can act cyclically at some point in time. I would advise contacting your investment advisor on the kind of exposure you can take in a particular sector. Sectoral funds add value to ride long cycles," he said.

Also, watch Rahul Jain of Edelweiss Wealth talk about diversification within an equity portfolio.

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