“Many new investors were already concerned about poor returns from their equity investments. Now with the Adani issue, many investors are worried that the stock market may tank,” says a mutual fund advisor who doesn’t want to be named. Hemant Rustagi, CEO, Wiseinvest, agrees that many investors are worried about the market, but he says it should be a great lesson for investors. “Experienced investors are not really bothered. Many DIY and new investors who started investing in equity mutual funds in the last few years are really concerned,” he says.
Advisors say most investors are not panicking because the Adani issue hasn’t spilled over to mutual funds. Most mutual funds did not have any investment in Adani Group companies. Some mutual funds had investments in these stocks but that was mainly because of index and ETF composition. Quant Mutual Fund was hit since it had exposure to two Adani stocks. Read: Quant Mutual Fund schemes fall 2.50-6.28%. What should you do? and Do your mutual funds have investments in battered Adani stocks?
Mutual fund advisors say the entire scenario once again underscores the importance of investing in mutual funds with a proper investment plan. They say many investors get into schemes without understanding the risks involved and they realize the mistakes only when the market becomes volatile. “Many DIY investors chased returns and got into risky schemes without realising the risks involved,” says Rustagi.
If you are feeling the pressure, the first thing you need to do is to stop the urge to stop or sell your investments. You should always remember that equity or stocks are always risky and volatile in the short term. So, taking a call on the basis of two-year performance is not a wise decision. You should always invest in equity mutual funds only if you have an investment horizon of at least five years.
What if you realise you got into the wrong schemes? You may sell your investments and get out if you want money immediately. If you can wait, give your investments some more time to perform. However, don’t make any more investments in it. Always choose mutual funds based on your goals, investment horizons, and risk appetite. For example, if you are conservative investor, invest in large cap mutual funds. (See: Best large cap funds to invest in 2023) If you have a moderate risk profile, choose flexi cap funds. (Best flexi cap funds to invest in 2023). If you have a high risk appetite, you can invest in mid cap, small cap, or sector/thematic schemes. However, be mindful about the risks and always have a long investment horizon.
