Chennai: These are unprecedented and trying times. For the Mutual Fund industry, the last four months were a busy one.
The stock markets were volatile. We saw a deep fall in March and also saw a smart recovery post that. And that is the inherent nature of equity markets. As they say, volatility is a feature of equity markets and not a bug. So equity investors will need to periodically ride this roller coaster of volatility.
“Recently, the data for the month of June released and net inflows into equityĀ funds had dipped to multi year lows. On the other hand demat and new brokerage accounts were on a big rise, clearly signaling that people preferred to invest in direct equity rather than through funds,” says Neil Parag Parikh, chairman and CEO, PPFAS MF.
“That said, the last few months my team and I interacted with many of ourĀ investors and advisors. Overall, it was heartening to see the maturity displayedĀ by a lot of them. It was quite different from previous market crashes and I wasĀ pleasantly surprised by the sensible behavior and patience displayed by our investors,” he says.
He however adds: “On the other hand, severe drop in prices and high volatility tested peopleās nerves too. We saw investor behavior change with changing market conditions. It tested the patience of even seasoned investors and long-term investors suddenly started getting paranoid with short-term market movements.”
Stating that there are investors who suffer from bad advice, Parikh adds: “People who are not qualified or registered as advisors guide and recommend them on their investments. I have seen this is extremely detrimental for their investment journey.”
He concludes by saying, “At this time, I believe those investors who follow their asset allocation, continue with their investments systematically and manage their behavior well will be successful. Emotional strength to see off rough periods, resilience to not follow the herd blindly and having faith in the investing process will be crucial. Patience to ride out the volatility and also take advantage of it by investing more when you donāt feel like will be richly rewarded.”