Nifty tanks over 8% in last three months - what should MF investors do?

Nifty tanks over 8% in last three months - what should MF investors do?

by 5paisa Research Team Last Updated: 2022-05-16T13:03:24+05:30

From April 5, 2022, till date markets plummeted close to 12%, while over three months it dropped a little more than 8%. Read on to find out what equity MF investors should do?

Those investors who are either heavily invested in equity funds or in long-term debt funds might see some decline in returns. In fact, those who started investing in recent times would be witnessing their portfolio in red. However, it is highly advisable not to panic as it leads to poor decisions and might dent long-term wealth creation.

If you look at Nifty 50, it is tanking ever since October 2021. Returns of Nifty 50 Total Returns Index (TRI) from October 2021 till date then it has plummeted nearly 14%. Moreover, the broader markets too have followed the suit with Nifty Mid-Cap 150 TRI and Nifty Small-Cap 250 TRI declining 14.8% and 15.4%, respectively. Similarly, for the same period, if we look at the returns of large-cap, mid-cap and small-cap funds, the returns were negative 15.4%, 14.4% and 13%, respectively.

Equity MF Category 

Returns (%) * 

Sectoral - Technology 

-19.4 

Sectoral - Financial Services 

-18.3 

Large Cap 

-15.4 

Flexi Cap 

-15.1 

Large & Mid Cap 

-15.0 

Multi Cap 

-15.0 

Tax Saving (ELSS) 

-14.8 

Index Funds 

-14.6 

Mid Cap 

-14.4 

Thematic 

-14.2 

Sectoral – Pharma 

-13.3 

Value/Contra 

-13.3 

Thematic - MNC 

-13.3 

Small Cap 

-13.0 

International 

-12.1 

Sectoral - Energy/Power 

-11.9 

Thematic - Dividend Yield 

-11.5 

Thematic - Consumption 

-10.7 

Sectoral - Infrastructure 

-10.4 

Sectoral - Auto 

-9.2 

* Returns from October 19, 2021 to May 13, 2022 

 As can be seen from the table above, it was sectoral and thematic funds such as auto, infrastructure, consumption, dividend yield, power and so on, which outperformed the frontline as well as broader market indices. In fact, even the broader market indices outperformed the frontline indices. However, if we purely look at the performance of equity funds excluding sectoral funds, thematic funds and index funds, then most of the funds gave returns between negative 12% to 15%.

What should investors do? 

If you are a disciplined investor having a well-planned Systematic Investment Plan (SIP) going on, then you need not be worried as in the present market situation, you would be buying more units are lower Net Asset Values (NAV). However, if you are a lumpsum investor in equity funds with short-term investment horizon, then any relief rally in the market would is a good opportunity for you to exit. But if you are a lumpsum investor with long-term investment horizon, then this would be a great opportunity to add more units in a staggered manner.


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