Equity MF—The Best Wealth Creating Asset Class

The Indian equity markets might have got their mojo back. This is reflected in the rise of the key equity indices. They are up by 3 per cent to 10 per cent in a month till date. The overall market cap of the listed companies has increased by almost 5 per cent during this period. It has added Rs. 6.4 lakh crore of market cap in the last seven trading sessions ending March 12, 2019. It is almost equivalent to total assets under management (AUMs) of equity schemes at the end of February 2019.

Such a rise in the equity markets has lifted the net asset values of almost all the funds. This, we believe, will help in halting the fall in the inflows in equity mutual funds that we are witnessing currently. The month of February saw mutual fund inflows falling to Rs. 5,122 crore, hitting a 25-month low. Historically, equities remain one of the best wealth creating asset classes in the long run. However, in the short run, you may see some uncertainty or volatility in returns. This should not make you shy away from investing in equity funds. Our cover story this time shows how equity MFs have created wealth for their investors. But it demands discipline.

You should remain invested and should avoid trying to time the market. Studies have shown that common investors are not skilled enough to time the market and moving between different funds. However, we at DSIJ have developed a unique ranking method that you can use actively and effectively to generate optimum returns by switching funds at the appropriate time. From this issue, we have also introduced 'risk' in our data bank that will help you to figure out investment as per your risk appetite (more on this on page no. 21).

Hope you will use our ranking method to make profitable investment decision. 

SHASHIKANT