The ups and downs in the stock market continue. So if you are looking for equity mutual funds (Equity Mutual Funds), then when the market declines, the investors (Mutual Fund InvestorsIt is necessary to know what to do. Financial experts say that equity mutual funds are completely dependent on market risk. When the market goes down, the investors’ portfolio shrinks. In such a situation, it is necessary for the investors to be aware of the risk. Periodic asset allocation, portfolio review is essential for financial discipline. With this your investment will always be safe and will give better returns.
Investment experts say that it is important to know about risk profiling before investing in mutual funds. With this, investors will have the right information about the risk. It is important for investors to understand the investment goals, for how long to invest, what is family dynamics, what to do with returns. Based on these factors, risk assessment will be better for investors. Asset allocation will be done according to the risk.
In a report published in Mint, Optima Money Managing Director Pankaj Mathpal said that there are different categories of equity mutual funds. It can be small cap, mid cap, large cap, mixed cap. The asset allocation is different for different categories of mutual funds. The fund should be selected on the basis of how much risk the investor can or should bear. Investors should always keep their portfolio diversified. Midcap, small cap, large cap, all should be included in the equity fund itself.
When there is volatility in the market, both the rise and fall, the units of the mutual fund are affected. However, the impact of large cap funds is less, while small caps see more volatility. In such a situation, the investor can increase or decrease the investment in small cap, midcap and large cap as the volatility increases. Investment in smallcaps can be increased when the market declines. It will give higher returns when it picks up.
Financial experts also say that one should invest in mutual funds for the long term. If you invest for a long time, the returns can be manifold. Investing for a long period reduces the risk. Review of funds is necessary during investment, but doing investment review on a daily basis adds to the tension. Review your portfolio 3-4 times a year. Waiting for a longer period will give great returns.