How Should Mutual Fund Investors Respond After Sensex Surges By 5,330 Points
After the Sensex surged by 5,330 points as compared to November lows to reach a record of 83,133, mutual fund professionals advised investors to keep a well-diversified portfolio for navigating the prevailing market conditions. They suggest investors allocate 10% of their investments to gold and 5 to 7% to silver.
Professionals also recommend investors invest at least 20-30% in duration-focused debt instruments and should invest the remaining in equity using the staggered approach to minimise the risk related to market volatility.
On November 21, the Sensex dropped to a low of 76,802 and reached the highest of all time of 83,133 on December 13, 2024. BSE Sensex has increased by approx. 10.91% in the past nine months, and the Index gave a return of approx. 16.58% in the past one year. In the last three months, BSE Sensex has given only 0.003% returns.
After the BSE Sensex hit a new milestone, mutual investors were focused on their investments, so they are seeking to know whether they should continue their investments or postpone them. Mutual fund experts do not suggest investors postpone their investments, because if they postpone, it means they miss out on the potential growth opportunities.
If they are confused, they should continue with SIPs or STPs, which help them to take advantage of rupee cost averaging. In the case of lumpsum investments, professionals suggest investors should make investments and allocate 50% immediately and the remaining amount to balance risk and opportunity.
A tax professional said, “SIPs and STPs are a form of continuous investment that also makes the most of rupee cost averaging by reducing the shock of volatility. In the case of a lump sum investment, use 50% immediately and the remaining amount at periodic intervals to make sure you enjoy both sides of the coin—risk and opportunity. The crux is not to get out of investments but to ride the trend.”
