Explained: How mutual funds have performed in last 6 months?

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The last six months have been quite mixed for the mutual funds’ industry, according to Prateek Mehta, co-founder and chief business officer of Scripbox — a digital wealth management service.

The equity funds, as per Mehta, have had a spectacular run with returns ranging from 29 percent to 38 percent depending on the category of the fund. For example, mid-cap funds seem to be regaining some interest with slightly higher performance.

Debt funds, on the other hand, as Mehta says, have had their own challenges.

“Returns in debt funds ranged from 1.5 percent to 4.5 percent depending on the category. Funds at the shorter end (where a lot of investor money is) are currently experiencing muted returns i.e. levels that are lower than what investors are typically used to. This can be attributed to the current interest rate scenario as well as the prevailing sentiment towards risk aversion,” Mehta states.

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Hybrid funds, meanwhile, have performed in line with expectations – categories with higher exposure to equities returning higher than the categories with conservative portfolios.

It’s important to remember, Mehta stresses, that mutual fund performances in the past 6 months should be seen on the back of what was expected coming out of the pandemic, while also considering how the economy actually performed.

“The resilience of businesses in the organised sector was quite encouraging and that sentiment, we believe, was captured in the performance of equities,” he affirms.

Taking cues from this, investors should understand that these kinds of fluctuations (be it positive or negative) are part of the journey and one must take them with a bit of caution.

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“It’s better to give the investments time and they will give back the wealth. At the onset, 6 months is a very short period of time. There are a few time-tested strategies for creating and accumulating wealth. It is important to be patient, have a long investment horizon, invest regularly and make increments in the monthly investments as the income goes up. Short-term movements, whether up or down, are often not relevant to long-term goals. Having a long investment horizon and letting compounding work is a strategy that works for most,” suggests Mehta.

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

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