Month of June has been positive for the portfolios including equity and debt funds, the markets have rallied due to inflows from foreign institutional investors in stocks to the tune of 23000+ and 38700+ crores in the last one and three months, which resulted in 4.80% and 24.40% absolute gains, our mutual fund portfolios have delivered 6.7% and 23.0% on an average across funds.
Markets as compared to highs of Jan 2020 is still -17% away, so our portfolios will need some more time to recover in the current context , markets have been surging purely on inflows from foreign funds which is a good sign in the short term but our economy has to recover and be resilient . Flows can elevate/bring down markets sharply during these periods of uncertainty in absence of expected revival in economic activity and response to the pandemic.
So, at this point of time we feel we need to be cautious and defensive, our suggested category of schemes based on time frames are
- For less than five years – Short term debt, banking & PSU, selectively gold and arbitrage funds
- For more than five years – Equity funds
We suggest continuing existing systematic investments as this is meant for long term and to average out market fluctuations, we will accumulate more units compared to Jan 2020 highs now so it’s a discount buy.
Before you invest please ensure adequate funds for contingencies are set aside (6 months expenses + EMIs), pay life and health insurance premiums on time, pay off high interest loans ( eg: credit cards ,personal loans )
We wish you a safe and healthy year ahead.