For Unhappy Investors

I come across a lot of my friends who are unhappy with their investment in mutual funds. Most of them have invested in mutual funds three years back and at present, they are sitting on unrealised losses on their portfolios. When they purchased these funds three years back, they had witnessed a sharp bull run in their NAV’s. They expected the bull market performance to carry on. Now they are ruining the fact that they did not book profits at that time. My friends should have known the risks associated with investing in mutual funds. You can even loose your capital invested. It is of utmost importance for investors to know about the risks associated with mutual fund investing. They were generally mis-informed by a few agents and distributors who only have the knowledge of filling up forms and submitting it to the respective companies and earn good commissions.

Markets outlook: It is for sure that even the best mutual funds have lost all their gains of the past three years but a few good mutual funds that are five years old are still in the green. Government is trying its level best to infuse capital into the markets to spur growth. Foreign investors are on the lookout for an opportunity to enter the market through FDI route. Even foreign institutional investors who have liquidated their portfolios last year will return back to emerging markets like India. Reforms and disinvestment are on the cards. India growth story is robust in the years to come.

Advice for investors: If you are in urgent need of cash, then only think of liquidating your investments at losses or else stay invested in the loss making mutual funds. You can switch between funds if your fund has performed worse then their category on benchmark returns. Moreover, try and invest for long term capital gains in the markets. You have quite a few good mutual funds that have revalued up to 60% from their highs and they will surely perform when the markets start performing. You should look at investing in small chunks at every market correction. Don’t stop your SIP investments as they purchase more units when the markets correct.

Remember Warren Buffet’s advice. "Be greedy when others are fearful and be fearful when others are greedy". Follow this principle and you will benefit the most from markets.