Mutual Fund Strategy: The stock market has made its all time high last week. Sensex crossed the level of 40 thousand for the first time. At the same time, the Nifty also crossed the 12900 level and moved towards 13000. If seen, the Sensex has seen more than 75 percent growth in March this year. During the lockdown period, the market has seen a significant recovery since May. During this time, the valuation of the market has increased once again and many stocks have also crossed or are nearing their 52-week high. In such a situation, equity mutual fund investors have once again started worrying whether they should book some profit from here or leave the investment.
Since May, as the rally has started in the stock market, the returns of equity funds have started improving. In the last 3 months, the average of the largecap fund, multicap fund, midcap fund and smallcap fund segment has been 12 per cent, 11 per cent, 11 per cent and 12 per cent. At the same time, 7 percent, 7.5 percent, 15 percent and 19 percent returns have been received in these segments during the last one year. At the same time, if you look at the returns of different funds, some have given up to 20 per cent returns during this period.
What should investors do
BPN Fincap Director AK Nigam says that the market has witnessed a good rally since the low of March, which is also benefiting the equity fund investors. It is true that the value of some of the funds has increased this much. Nevertheless, investors should first see whether the purpose with which they have invested has been fulfilled. Or is on the verge of completion. Or is just the beginning. On this basis, they should decide to recover profits.
Start by shifting 20%: If their goal is approaching completion, then investors should withdraw 20-20 per cent of the money at a fixed time interval instead of making a profit simultaneously. Initially, they can shift 20 per cent of their investment to debt funds. If there is a possibility of a fall in the market, then 20 percent, 20 percent then shift to debt.
Short Duration or Liquid Fund: But it is worth noting that the kind of macro environment has been created, the market may come up again after the lightening correction. Therefore, the best way is to withdraw money from equity funds, invest it in debt reduction in short durations or liquid funds. So that when the market picks up again, after the debt fund matures, they can put that money back in the equity fund.
Asset Allocation Theme: Another way is better to withdraw some money from the equity fund and invest it on the basis of asset allocation theme. The asset allocation theme diversifies your portfolio and provides protection against the risk of fluctuations. In Asset Alokeyan theme, your money is invested in equity, gold and debt.