Despite the global and local key economic indicators continuing to be not very encouraging, the mutual fund industry has been increasing its AUM which stands at Rs 26.32 lac crore as of 31st Oct 2019. This has been mainly driven by the equity markets and a few stocks in it. The government is rolling out multiple strategies to help the economy recover over the next few quarters. Oil prices have also somewhat stabilised which should have a positive effect on the country’s current account deficit.
While our recommendation remains not to get swayed or overwhelmed by the equity market movements or the seemingly dull macroeconomic indicators, we also recommend that it may be a good time to accumulate equity as the valuations are reasonable. It is not a broad based rally that is currently happening when you see the equity markets at an all-time high. That means that the market is currently being driven up by a few select stocks. If one keeps investing in mutual funds through an SIP (Systematic Investment Plan) route, investors will be able to take advantage of lower valuations where ever applicable as well as rupee cost averaging.
We would also like to highlight that for the Indian mutual fund industry this is the 65th consecutive month which is showing rise in the number of folios, which stands at 8.63 crore as of October 31st 2019. This speaks volumes on the increasing investor confidence in the mutual fund industry and also the fact that we are seeing a lot of new investors coming in, which is also clearly indicating a shift in the investing trend for a retail investor in India.
So if you are an investor in mutual funds, review your portfolio, stay invested and keep investing into the equity markets through an SIP route. We have now enough of historical data points to evidence the wealth creation which is possible by starting to save early, save regularly and investing in the equity markets. If you are new to Mutual Funds, please take help in understanding about the funds from your financial advisor and we recommend a start though an SIP route into equity or balance funds. The debt space is also consolidating, so having a component of your asset allocation in debt mutual funds not only proves to be tax efficient over a 3-year term but also gives you an opportunity to increase your portfolio return on the debt side as well.
We at L&T Mutual Fund always recommend to all investors to be goal focussed. You must clearly chalk out your short term and long term financial goals, do your asset allocation as per your financial goals and then stick to the investment over the indented period of time to reap the benefits. So if you are still wondering if it is the “right time” to get into the markets at 41,000 levels, we cannot give you any predictions on that. Timing the market is elusive and impractical. However, what we can tell you is that, it may be wise for you to start a SIP.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.