\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t

Category<\/td>\n\t\t\t	Absolute (%)<\/td>\n\t\t<\/tr>\n\t\t
30-Sep-23 To 27-Oct-23<\/td>\n\t\t<\/tr>\n\t\t
Flexi Cap Fund<\/a><\/td>\n\t\t\t	-2.45<\/td>\n\t\t<\/tr>\n\t\t
Large & Mid Cap Fund<\/a><\/td>\n\t\t\t	-2.86<\/td>\n\t\t<\/tr>\n\t\t
Large Cap Fund<\/a><\/td>\n\t\t\t	-2.73<\/td>\n\t\t<\/tr>\n\t\t
Mid Cap Fund<\/a><\/td>\n\t\t\t	-2.76<\/td>\n\t\t<\/tr>\n\t\t
Multi Cap Fund<\/a><\/td>\n\t\t\t	-2.33<\/td>\n\t\t<\/tr>\n\t\t
Small cap Fund<\/a><\/td>\n\t\t\t	-1.46<\/td>\n\t\t<\/tr>\n\t\t
Value Fund<\/a><\/td>\n\t\t\t	-2.54<\/td>\n\t\t<\/tr>\n\t<\/tbody>\n<\/table>\n<\/div>\n<\/center>\n\n\n\n Past performance is not an indicator of future returns Category average returns as on October 27, 2023 Returns are point-to-point in %. Direct plan – Growth option considered (Source: ACE MF, data collated by PersonalFN) <\/p>\n\n\n\n The corrections in the equity market and the subsequent decline in equity mutual funds can be attributed to the following factors:<\/p>\n\n\n\n The Israel-Hamas war and the possibility of it escalating further has sparked risk-off sentiment among investors. Considering India’s dependency on imported oil and gas, the war could have a negative impact on the domestic economy in the near term.<\/li> The 10-year US Treasury yields have surged<\/a> to a multi-year high of 5% amid the hawkish stance of the US Federal Reserve. This raised concerns regarding the possibility of a longer period of tighter monetary policy than anticipated.<\/li> There is a risk to the inflation trajectory owing to supply chain disruptions and rising international prices owing to tensions in West Asian countries<\/li> FIIs have been persistently selling in the Indian equity market driven by a rise in the US dollar which has made emerging markets less attractive. They are likely shifting to other assets like gold, bond, currency, etc.<\/li> Uncertainty over the GDP growth trajectory due to the possible impact of El Nino and high debt-GDP ration of many major economies.<\/li><\/ul>\n\n\n\n The fact also is that the Indian equity markets are trading at a premium compared to their global peers on the back of a rapid surge in stocks, particularly in the mid-cap and small-cap segment. Accordingly, the margin of safety has narrowed.<\/p>\n\n\n\n The investment strategy to consider when mutual fund NAVs are going down<\/strong><\/p>\n\n\n\n Whenever there is a sharp downswing in the equity market, investors naturally worry about the value of their mutual fund holdings going down.<\/p>\n\n\n\n During bearish phases, many investors tend to redeem their mutual fund units, while a few others stop\/pause their investments. However, it is not a prudent approach to time the investment decisions in mutual funds.<\/p>\n\n\n\n It is also often observed that investors look at the past performance of mutual fund schemes and trade in them frequently. Such investors often dump a well-performing scheme to book profit whenever the markets start correcting and the scheme NAVs go down.<\/p>\n\n\n\n What they forget is that that unlike in the case of stocks, where the price determines whether it is undervalued or overvalued, the NAV of a mutual fund only reflects the current value of all securities the scheme holds in its portfolio.<\/p>\n\n\n\n [Read: <\/strong>What is NAV in Mutual Funds? How Does it Affect Your Investments?<\/a>]<\/p>\n\n\n\n [Read: <\/strong>Do You Invest in Mutual Funds with the Mind of a Trader?<\/a>]<\/p>\n\n\n\n Timing your entry and exit in equity mutual funds can appear as an easy way to sail through the volatile nature of the market. But timing the market is not everyone’s cup of tea since market movements are highly unpredictable. One can never predict if the market has bottomed out after a correction or whether it will keep rising after reaching a peak. Consequently, there is a high chance of your trades not pulling off as expected. If investors frequently churn their mutual fund portfolio, it can lead to the following conditions:<\/p>\n\n\n\n 1. It can put a brake on the process of compounding wealth which may negatively impact the overall growth of your investment portfolio.<\/p>\n\n\n\n 2. Frequent trading attracts taxes and exit load, which can eat into the overall returns.<\/p>\n\n\n\n 3. Investors may end up earning lower returns than expected, which in turn can create a hurdle in achieving your financial goals.<\/p>\n\n\n\n As you may know, mutual funds are professionally managed. The fund managers have the expertise to select stocks at appropriate valuations based on their investment objective. During a market correction, they aim to identify and invest in quality stocks available at attractive valuations, which results in higher gains when the market starts ascending again.<\/p>\n\n\n\n Likewise, when the market is overheated, they utilise their knowledge and expertise to determine whether a stock\/sector still holds potential or whether there is a need to replace it with a better alternative. This strategy enables mutual funds to participate in the market rallies and also protect against the downside risk during bearish phases.<\/p>\n\n\n\n Thus, mutual funds are well-placed to sail through market highs and lows.<\/p>\n\n\n\n What should investors do?<\/strong><\/p>\n\n\n\n – Continue with SIP investment<\/a> as it will help you to mitigate the impact of market volatility on the portfolio and you also benefit from the averaging of cost of investment.<\/p>\n\n\n\n – Investors can consider investing lump sum in case of a sharp correction to take advantage of potential bounce back in the market. However, remember that the market could decline further before it rebounds.<\/p>\n\n\n\n – Maintain a diversified portfolio of suitable asset classes and their sub-categories within them to align with your financial goals, risk appetite, and investment horizon. Investors can consider investing predominantly in Large Cap Funds<\/a> as they are relatively stable and less risky in the long run. Investments in Mid Cap Funds<\/a> and Small Cap Funds<\/a> should be dealt with caution as they are vulnerable to higher downside risk.<\/p>\n\n\n\n – Follow a goal-based investing, because then you will be less likely to feel anxious during the ups and downs of the market and can avoid making any decision in haste. If the equity market volatility makes you jittery, it is better to reassess your risk-taking ability.<\/p>\n\n\n\n – When investing stay put till the goals are achieved. But don’t forget to review the portfolio at regular intervals to weed out any scheme that has been consistently underperforming, and to rebalance (from equity to non-equity, or vice versa), if necessary. Many investors tend to redeem their mutual fund investment within a couple of years from investment, which is not enough to realise the full potential of equities.<\/p>\n\n\n\n To conclude:<\/strong><\/p>\n\n\n\n Even though there can be a lot of uncertainties and volatility in the short term, equity mutual funds are known to reward investors who exercise patience and a disciplined approach to investment. Therefore, instead of timing the market, mutual fund investors should focus on ‘time in the market’ to earn better returns over the long term.<\/p>\n\n\n\n Further, it is important to note that investments in equities take time to grow and generate meaningful returns. So, it is preferable to create a diversified portfolio of mutual funds and stay invested with a long-term view of at least 5 years. Avoid getting influenced by short-term market movements. Investing via SIP is a great way to make timing the market irrelevant as it allows you to invest a fixed amount regularly to achieve your various goals.<\/p>\n\n\n\n This article first appeared on PersonalFN\u00a0here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" The optimism in the equity market that prevailed between April and September 2023 appears to have reached a tipping point. Since the latter half of October 2023, the Indian equity market has witnessed a substantial decline amid weak global cues. The Sensex is down about 6% from its all-time high, while the Nifty 50 is…<\/p>\n","protected":false},"author":5,"featured_media":5923,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/5922"}],"collection":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/comments?post=5922"}],"version-history":[{"count":1,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/5922\/revisions"}],"predecessor-version":[{"id":5924,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/5922\/revisions\/5924"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/5923"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=5922"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=5922"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=5922"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}