Tips to managing mutual fund investment during the lockdown

04/26/2020

Mutual Fund Investments can be made through either the SIP route or a lump sum plan. Investors with large capital generally opt for, a lump sum plan while the systematic investment plans in mutual funds came as a revolution for the middle class investors in the Indian stock markets. While the current market corrections of the overpriced shares since February have overwhelmed the investor confidence, the SARS CoV-2 that has led to a global lockdown, let alone, lockdown in India; is a new and unprecedented challenge for the economy as a whole. It is a matter of concern to contain the volatility of markets and hence, restore the faith of middle class investors in fund managers. All the stakeholders from SEBI to the top mutual fund houses are working tirelessly in this regard.

Here are our tips for you to manage your mutual fund investments during the lockdown period, considering experiences of Indian markets from the global financial crises and how the situation is different from then with respect to the sip investors:

  1. The first and foremost implication of the current lockdown in investor behaviour should be a quick switch to the online SIP investment plans. The mutual fund houses are establishing various procedures to enable you in having a seamless switch from your offline dealings to online SIP investments.
  2. We must not ignore the fact that the role of domestic institutional investors has always saved the Indian markets from major pitfalls including the global financial crisis of October 2008. The buying by DII have always pointed towards the bright end of the tunnel every time there has been a heavy selling by the foreign portfolio investors and this time too, since February, the numbers indicate that the sharp corrections have been absorbed by domestic institutions.
  3. A bearish approach will lead to no good, be it the market economy or the investors. To save the markets from a severe backlash, you might use the bullish approach taking under consideration all the assurances of the top mutual fund houses and analysis of experienced fund managers.
  4. Another tip is that do not forget, this is one opportunity when you get to buy the stocks and equity at lower prices. Keeping in mind, long term returns, it would be wise to choose an online SIP investment plan accordingly without making any compromise with your financial targets.

With the loss in jobs and salary, in case the lockdown extends longer, SIP flows are very likely to get hit. Therefore, let us keep up the investments and optimism intact until there's still a silver lining with the increased buying by DIIs showing a maturing retail investor than in 2008. The good news to conclude with is experts believe that process of corrections and slowdown has hit the lowest mark in the economy, and the risk reward for long term investors is sure shot.