Remain Invested

Nothing can replace your knowledge. This becomes even more important when it comes to taking your financial decisions. If you are financially wise and can take rational decision, you can generate better returns in every market conditions. 

In the current scenario, the markets are volatile and almost all categories of funds are giving negative returns. More importantly, this situation is likely to continue for some time. Nevertheless, you can still use your knowledge about the financial market to generate positive returns in this volatile market. In fact, volatility in itself can help you to produce returns better than the market. 

This is especially true if you invest in an arbitrage fund. It has been observed that, historically, returns from these funds go up during volatile period. The reason being, these funds exploit the opportunity of price differential between two different markets. That is the difference between the cash and future markets. During the volatile period, the difference between these two markets widens, which is used by the arbitrage funds to create returns. In the last one month and three-month periods when every category of funds have given negative returns, arbitrage funds on an average have been able to generate positive returns for their investors. Another important aspect of these funds is that they are tax-efficient as they are treated as equity funds. 

Apart from the arbitrage funds, there are other categories of mutual funds that can help you to ride the current volatility. Our cover story in this issue discusses in detail some of these categories and how can you use them. 

In addition to the above, we have also covered an interesting topic. It covers in detail how you can use mutual funds in your different life stages to attain your financial goals. Furthermore, we have also covered in this issue a story for the NRIs and how can they invest in mutual funds.