3 types of Mutual fund schemes for current volatile market
The days when an investor could blindly or randomly pick an equity mutual fund scheme through Google-surfing and stay put witnessing growth of his investment has gone-by. Last couple of years were just amazing for equity markets which brought many investors to the mutual funds. But post union budget 2018 and because of weak global cues, the fall in the markets have disappointed many investors and caused them to worry about their investments. It is time that investors revisit their mutual fund portfolios and rebalance it as the returns from the mid-cap and small-cap funds won’t be as stunting as they were in the last couple of years.
With the stretched valuations all the indices are witnessing an immense down trend. Almost every third investor is looking for the perfect strategy or investment options to survive in the current volatile market scenario. Below are some mutual fund categories or schemes which investors can consider for now. It is very important to know the strategy which can be useful in such a market to safeguard the investment.
Here are three types of schemes which investors can consider in the current market scenario
Value Funds
The value investing strategy can be useful for investor in the current market scenario. Value funds tend to invest in the securities which are undervalued by the market due to some of the bad news or negative parameters. These stocks are fundamentally strong and are able to overcome the losses incurred in the down trend. As we have witnessed the bull market in last couple of years many stocks have been overvalued which are witnessing the major downfall in the prices currently. In a volatile market, value-based investment strategy is expected to bode well for investors with a longer horizon.
Dynamic Asset Allocation Funds
Dynamic allocation is a strategy which adjust the corpus allocation as per the market momentum. These funds are best suited for the moderate risk appetite investors. In these type of funds the equity exposure is adjusted according to the market movement. The composition of debt and equity instruments is maintained in a dynamic asset allocation strategy. The hybrid fund can be an effective strategy in the current market scenario.
Credit Opportunities Fund
In the debt fund basket, there are a lot of choices for investing into credit opportunity funds right now. These funds choose the lower rated bonds which have the potential for getting upgraded on account of improving fundamentals and balance sheet. Fund houses devote significant research resources for ensuring the risk that the fund house take is worth it. These funds will also be a good option for the investment in the current market scenario as these funds will safeguard the returns with the investment in the debt securities.