MULTI-CAP FUNDS: A GOOD CHOICE
Worldwide, the equity market has jumped more than 20 per cent from its recent lows for various reasons. And the Indian equity market is no exception. Some of the sectoral indices in India such as pharmaceuticals have gained almost 40 per cent. These gains are despite the nationwide lockdown that has been extended up to May 3 with no surety that there will be no Lockdown 3.0. In a span of less than three months, we have seen a fall of more than 30 per cent in the indices’ value and then a rise of 20 per cent.
Most of these gains are triggered by the hope that the coordinated response to this global pandemic by both central banks as well as the governments will contain the economic damage. But for an investor, such developments have not made him wiser. Rather, all this becomes too confusing. The investor feels lost. In such a scenario we want to make sure you take the right investment decisions.
As such, our cover story in this issue will help you surf through these volatile times. We have studied the last two major pandemics and the great financial crisis of 2008 to understand how different categories of funds react during and after any such event. It will help you create an investment roadmap for both short-term as well as long-term decision-making. Nonetheless, if you are not interested in managing your money actively, multi-cap funds may be the right recipe for you. They have the mandate to invest across sectors and market capitalisation, giving leeway to fund managers to manoeuvre where the opportunity exists.
Besides, you can also blend your investment knowledge to make smart investment decisions. So if you are someone who believes that pharmaceutical or any other sector is going to be the next winner, you can scan funds in these categories and invest in those overweight on such specific sectors. Investing directly in a sector fund is a high-stakes game as it may or may not go the way you expect it to. Hence, sticking to multi-cap products is what makes for the right investment sense as of now. Meanwhile, we hope you and your family remain healthy and safe.
SHASHIKANT