The AUM Assets under management) of the Indian mutual fund industry was up by 21.7% from Rs 17.55 lakh Crores to Rs 21.36 Lakh Crores in March 2018. 9.72 lakh SIP accounts have been added on an average each month in the FY 17-18.The growth figures are significant as it was driven by increased retail participation and increased participation from wider geography.
While the past financial year has been a growth story for the mutual fund industry, Feb and March saw a dip in the markets by 8 %, which brought in some significant corrections and volatility. Hence in recent times, one must have come across several articles written in various forums / media explaining how the downside has started and we suddenly started hearing of predictions of a lower market by x%.
And then we have a month like April, the first month in the financial year once again showed us why time in the market is far superior to timing the market. The sensexrose by around 6% .In our earlier newsletters we have showcased the benefits of staying invested for the long term. Despite this kind of market volatility, the markets have once again crossed 35000 levels which just reinforce our earlier stated basics.
So what is it that we should look for?
With a growing GST base and digitised economy spread increasing, tax collections are slated to grow. We are also seeing earning growth across sectors. Global uneasiness on the North Korea front is also showing signs of cooling off. Added to this improved corporate results and government keeping its focus on growth are all factors which we all should look forward to .This should add value to the markets also in the process.
What could upset the applecart?
Rising crude oil prices will be a worrisome concern for India. Also our agri driven economy is still heavily dependent on the monsoons, hence, any poor performance by Mother Nature can upset the growth trajectory. We should additionally remember that elections and run up to the elections will also bring in an element of uncertainty to the economy in general.
Lessons to be learnt:
Stay away from the noise and be goal focussed. If your goal was to stay invested for a long period of time, please do not get jitters with sudden movements in the markets. If your investment horizon is shorter duration, you may want to look at fixed income plans. Conservative investors should opt for hybrid funds like equity savings, dynamic equity funds. As we have consistently believed and backed the basics of investing in many previous newsletters, this time too, we would like to reiterate the fact that one should stay invested for long term to reap the benefits of the equity markets and through investment vehicles like mutual funds, you have an advantage of your funds being actively managed by professionals.
Happy FY19 to all our customers !
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.