13.03.2019

The Stock market movement of late resembles a roller-coaster phenomenon. The market which was seen continuous fall for five days a week before, has totally reversed  and the market has again come into the grip of  Bulls, thanks to the political upturns and perceptions. After all the markets  are more driven by  expectations and events waiting to happen.  And of course that is the characteristic of the market- certainty of  uncertainty . The irony is that  some investors who are hard core optimists by nature view  the market to go up further despite the contrarian views of a few cynics and the pessimists challenge the market and opts to think that the market is at its peak and hence would come down drastically and finally  both of them are proved right and wrong at some point or other, as the market goes up when we do not expect it to go up and slides down when we equally expect it not to happen.

In the backdrop of this nature of behavior of the stock markets, smart and prudent investors should do well to safely park their funds in select large cap mutual funds wisely. Whether the market indices are up or down, it is an advantage for the MF Investors as the Funds like eagles pick up stocks on both occasions and  so relatively the cost of acquisition gets averaged and hence there is no way that these MFs cannot give good yield in the long run. As the per capita income of our Country is constantly on the upward trend and the  larger part of savings of the people is expected to flow into a variety of financial instruments and most investors are either busy pursuing their own personal or business/professional commitments or lack due knowledge , MFs have naturally  emerged as the preferred investment vehicle. This has been amply demonstrated by the recent happenings in the market wherein the Foreign Investors have been selling and reducing their stake in the market for various reasons but  the Domestic Investors particularly the Mutual Funds have taken the contrarian call and invested  in the market as they see huge opportunity and hence the Index fall has not been substantial as envisaged. Mutual Funds’ assets (AUM) remained above Rs 23 Lakh Crores as at the end of Feb 2019- an increase over 200 % in the recent past!

Another surprise data goes to elucidate that since demonetization, AUMs of many funds have gone up by lakhs of crores and in fact most of the funds have witnessed doubling of their portfolio , perhaps thanks to DeMo’.

So  smart investing means a good percentage of our savings should flow to MFs with good track record, which are able to generate  returns higher than that of a passive benchmark (called Alpha), after meeting their usual management fees of 1.5- 2 %.

After all, Selecting the right large cap funds with high Alpha is the key to success!

Wish you happy and profitable investing!     For all the assistance, Goodwill is a just call away!