Many investors have discontinued their mutual fund (MF) systematic investment plans (SIPs). This is not surprising, as net asset values (NAVs) of most MFs have taken a beating in recent times.
And there are fears that the market may decline further. However, a study of the stock market over the years reveals that this may be a poor strategy . At the current NAV levels, your SIP can give you far more units than it could have ever done in the past couple of years. Investment in equities is the trickiest of all investment avenues. No other asset class can see such a rapid value erosion as equities. And a few other asset classes tend to rise as quickly. If this is the time to buy, the obvious question is ‘What do I buy?’ After all, there are numerous MFs to choose from and it is no mean task for an investor to figure out the right choice. Historic accomplishments do not guarantee future performance, but they do indicate the fund’s investment strategy and fund manager’s acumen in handling different market conditions. An existing and experienced fund is therefore preferable to a new fund offer (NFO). Selecting the right fund is also a function of the risk appetite. An investor with a low-risk appetite may do well to stick to funds that predominantly invest in large caps. DSP Merrill Lynch Top 100 Equity, Sundaram BNP Paribas Select Focus and HSBC Equity are some large cap funds that have a good track record. A multi-cap fund, with a mix of mid-, and large-cap stocks, is ideal for an investor who is willing to take extra risk. While the large-cap portion of the portfolio ensures stability and liquidity, a right selection of mid-caps may ring in cash for the fund when the market turns around. DSP Merrill Lynch Equity, Kotak Opportunities and ICICI Prudential Dynamic have performed well in this segment. For the bravehearts, sector-specific and mid-cap funds are the best deals. While these funds have fallen the most in the current meltdown , they are likely to give the biggest returns should the bull market make a comeback. IDFC Premier Equity and Reliance Regular Savings Equity funds have an impressive record in this category. As far as sector-specific funds are concerned, investors may invest in areas that have witnessed a huge price erosion and leave limited scope for a further decline. While no one can predict the market direction, history suggests that those who venture on paths where others fear to tread profit more than others in the long run. N.Sukumar Research Analyst www.kences1.blogspot.com --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
