As more and more investors are investing through a Systematic Investment Plan (SIP), equity funds are likely to play a significant role to play in their portfolios going forward. While SIP can be considered to be a good starting point for a long-term investment process, one may still have to face anxieties and challenges depending on the behaviour of the stock market. There are a few situations that can test the resolve of even a seasoned investor. Let us analyse a few of them and see how these need to be tackled to keep the investment process on track. 

It is quite common to see investors feeling of fear as well as excitement when the market touches dizzy heights. In such times, many end up booking profits too early or redeem the entire equity holdings. As a result, they miss out on varying degree of gains, depending on the timing of exit.

While booking profits periodically may be essential for a set of investors, for someone who is in the process of building capital over time, taking money out of the market in the name of profit booking would be detrimental to his long-term goals. The major advantage of following a disciplined approach is that one gets to invest at different levels and that helps in ‘averaging’ as well as in avoiding the temptation of exiting every time the market goes up. In fact, regular investments ensure that one invests even at lower levels, which an occasional investor does not normally do. 

Simply put, a disciplined approach helps an investor in keeping emotions out of the investment strategy. This is important as equities, as an asset class, tend to be more volatile in the short term as compared to other asset classes.

While some investors want to look at their equity fund portfolio valuation almost on a daily basis, there are others who do not feel the need to track their portfolio as they believe that merely having a long-term horizon investing regularly is enough to achieve success. It is important for investors to know that even though the discipline of investing regularly makes their portfolio immune to short-term volatility to a large extent, monitoring the performance of the portfolio remains an important ingredient to achieve success over the longer term. 

If some of the funds in the portfolio are under performing their peer group or their benchmark, its impact on the portfolio would make a dent in the corpus that would be required at the completion of the investment time horizon. While keeping a track of the portfolio may sound like a daunting task, in reality it is not so. 

For investors, the main sources of information can be websites of mutual funds that have complete and up-to-date information on the performance of their funds, newspapers, magazines and various personal finance related television shows. Besides, the Association of Mutual funds in India (AMFI) has its own website, which contains daily NAVs for all  the schemes, historical NAVs, scheme details as well as half yearly and annual accounts of schemes. In addition, there are also many full range personal finance portals that cover mutual funds widely. They provide a comprehensive listing of schemes and comparative analysis for each of the schemes. These can help investors a great deal in knowing how their schemes are doing vis-à-vis the peer group as well as the benchmarks.

In a rising market, mid-cap funds tend to do well as com-pared to funds that invest in multicap stocks as well as those that have a bias towards large-cap stocks. No doubt, mid-cap companies have a lot of room for growth as the economy marches ahead and hence can be a good means to enhance portfolio returns. 

However, investing in them can be riskier as compared to large-cap stocks. Therefore, investors need to be careful while selecting a mid-cap fund and deciding on the extent of exposure as these funds should not have a disproportionately high percentage in the portfolio.