Hello Readers!

Currently, many equity mutual fund investors are quite afraid due to the history that is being made by the Indian market. This kind of history is not a matter of fun for them rather it is creating a cause of worry for the Equity fund Investors. Most of the investors are seeing their investment portfolio return is negative, due to the current slowdown in the Indian market.

Well, this was not the condition of equity fund investor’s portfolio, a month ago, as a month ago the Sensex was at 41,000 levels and almost all Equity mutual fund investors were looking at relatively healthy growth in their portfolio, but currently, the Sensex is at 32,000 levels, which is indirectly hammering investors portfolio.

After an average performance of the market in the financial year 2019, it was moving on the track to recover itself from the loss it experienced last year, but then Coronavirus entered India, and only it is affecting the life of peoples, but it has a large impact on the Indian Market.

Then COVID-19 (Apart from Other Things) Happened

COVID-19 or Coronavirus, which is trending news on social media all over the world, is not a thing that can be ignored. It is a matter of serious concern, and people do need to take care of themselves and maintain proper hygiene in order to protect themselves from getting infected, irrespective of what impact it is projecting on your Equity fund investments.

Well, Coronavirus is not the only thing that is affecting the performance of the market, as there are other challenges say Yes Bank crisis, that is effecting the economy. However, this is a short-term story. The long-term story remains optimistic despite what we are witnessing.

History Matters…!

Well, at this stage when many Equity mutual fund investors are getting unstable and panic, after seeing their investment giving negative return, I would like to remind you all that you are an investor of equity Mutual fund, that means you have indirectly invested in the companies that are involved in the economy of our nation and the world. Many of the companies you and I own indirectly through equity mutual funds have seen terrible times that many of us cant remember though as may it happened at the time when we haven’t entered the world.

Let's take an example, you must have heard the name of a very stable company, Hindustan Unilever Ltd., which was established in the year 1933, almost 6 years before World War II. It’s part of the portfolio of almost all good equity mutual funds investing in large-cap companies. When the Second World War started, the market started facing the slowdown, the great depression was just about getting over then. This was the era when there were no mobile phones, telegraphs ruled the roost, but the conditions didn’t remain the same, and after a span, the market regained itself.

Basically, the point to note here is, many companies in which investors indirectly invest through mutual funds are older than us and have seen events we have read about only in our history textbooks.  

History explains that not only Indian Market, but different markets and economy all over the world, had experienced a lot of events that had led to its drastic slowdown, but good businesses tend to survive despite world-shaking events simply because their products continue to have demand even during the bad phase of poor demand.

Equity Fund Investing Is About Faith

Well, these times of economic slowdowns are a kind of reality check for investors, to check how much faith do they have in their Equity mutual fund asset allocation. How much do they have to believe in their Country’s economy?

As a mutual fund investor, you must have selected your fund to invest after value research on the fund, or you must have hired a financial planner or a mutual fund advisor, to pick up the best mutual fund for you to invest that can match your risk capacity in the tough times, so basically it’s the time to have faith in your selection and also have some faith in your financial planner.

Major events before, that has imparted its drastic effects on the market lasted for some time, and after a span, markets have again regained themselves and have given a good return to Equity mutual fund investors. So, it’s the time to show some faith towards the Indian Economy, and believe that it will handle this slowdown, it may take a while for the economy (both India’s and the worlds) to recover, but it will recover.

We have evidence from our history, how to market after suffering a slowdown due to major outbreaks or events that have shown a good bounce back. Here I will leave you with a chart to ponder. It shows what the BSE Sensex looked like during the last big market fall – the global financial crisis of 2007-08.

The market lost half its value and regained the same over slightly more than two years.

So, at this stage, equity investors, need the most is to hold their patience tightly, don’t lose it, and stay invested, wait for the black clouds to blow off, you will receive the sun rays. Believe in the power of businesses to improvise, adapt, and overcome.

You can contact us at Shri Ashutosh Securities Pvt Ltd., for any assistance, we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).