Remain Invested

Kiran Dhawale

 
There are very few options left for an investor in h the current market uncertainty. The equity and debt markets are both equally hit by the current bout of volatility. The portfolios of most of the investors have taken a hit of more than 10% in the last one month. Even the much-coveted IT-dedicated funds have not remained immune to the current market condition and have gone down in the last one month. Some of the safer bets such as ultra-short duration funds are also hit by the downgrades in rating of bonds of some of the companies as funds must mark down these bonds by 25-50% in their portfolios. 

This situation presents a predicament for most of you as you must be wondering what to do with your investments now. Should you skip your next SIP or delay the lump sum investment. Your answer to these questions will depend on two aspects. First, what is your investment horizon and, second, what is your risk appetite. So, if you are risk-averse and you are nearing your financial goal, you can stop your SIPs and start STPs (Systematic Transfer Plan) from equity funds to low-duration debt funds. Nonetheless, if your investment horizon is long enough, say, more than five years, the current downturn in the markets should be used as an opportunity to invest more. In addition to this, if you are an aggressive investor, you can start investing in small-cap funds as, on an average, these funds have lost 15% in the last one month and provide good a risk-reward opportunity. The bottomline is: until and unless your goal is nearing, you should remain invested in the market and do not tamper with your SIPs or investment plans. 

The current volatility is also due to uncertain political environment. Next year, we will have our general elections, the outcome of which will determine the future course of our markets. Our cover story dives deep into the subject and analyses what should be an investor’s action plan now regarding his mutual fund investments.

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