Model Fund Portfolio Unveiled

Given the current market scenario in the wake of the pandemic, investors are concerned about how to choose the right mutual fund portfolio to invest in. Is this the time to take advantage of the market correction? To provide a guideline, Dalal Street Investment Journal has structured a portfolio of funds that will serve you well in the long run

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The equity market is witnessing a sharp and unprecedented correction due to the coronavirus pandemic. The pace of correction is more than what we witnessed during the global financial crises of 2008. The pace of correction has been so sharp that the S & P BSE Sensex fell from its all-time high of 42,273.87 on January 20, 2020 to a low of 25,638.90 in a matter of just 48 days. During this period it fell by 38 per cent. You would be wondering how it impacted the mutual fund investors and what their response was. This fall was spread between three months and hence its reaction was not visible through the monthly numbers released by the industry body, Association of Mutual Funds in India (AMFI).

For example, in February 2020, the S & P BSE Sensex slid close to 1,500 points which is around 4 per cent. The monthly numbers released by AMFI recorded that mutual fund investors didn’t pull out money. In fact, if we look at the monthly report of the AMFI, we can see that the assets under management (AUM) of open-ended equity mutual funds have reduced by only 4 per cent but the inflows have increased by almost 37 per cent on a sequential basis. Even investments through the popular investment route for retail investors, systematic investment plan (SIP), didn’t witness a major decline.