Business Today|August 09, 2020
Not just largecaps, even midcap and smallcap funds have risen up to 35 per cent since March 24, a signal that the recovery is broad-based. Most sectoral indices are also up significantly. Even the worst-performing theme – PSU – is up 27 per cent.
Is the worst behind us? Not necessarily. Coronavirus cases are still rising. While the slowdown in the June quarter is a given, there may be negative surprises in the September quarter too. Most importantly, the recent rally has attracted a new breed of stock traders cooped up at home and trying to make a quick buck. A single negative trigger is all it will take for another downward spiral.
Whatever the situation months down the line, this is a good time to take stock of your MF portfolio and answer a key question — should you book profits, if any, or wait for a more opportune time? It is a tough call, but experts say that broadly, your MF strategy should be long term and not depend on your ability to predict and time the market. It is a different matter if you need funds for an important life goal, though.
Smallcap and midcap funds have widely underperformed large-cap funds for a couple of years now. However, the recent recovery has been broad-based with large-cap, large midcap, multi cap and even midcap and smallcap funds rallying 33-35 per cent. However, this doesn’t mean that all midcap and smallcap stocks are up. “Although small & midcap indices have seen a significant move, dispersion in returns across stocks is significant. For instance, a few stocks have fallen 25-30 per cent during this period, while several small-caps have risen 2x or more,” says Kaustubh Belapurkar, Director – Fund Research, Morningstar India.
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August 09, 2020