Are you wondering if you should invest in mutual funds amidst the pandemic situation? Keep on reading the article below to know what the industry experts at Paisa Invest have to say about it.
Investing in stock markets through a mutual fund is the easiest way of growing money. However, the Franklin Templeton episode has given rise to some speculations about the same in the mind of the investors. Besides, the market volatility induced by the Covid-19 pandemic is said to affect the market situation further.
Trends in the mutual fund market during the Covid-19 pandemic:
Equity-oriented schemes show negative sales: A sharp slowdown in economic activity across the globe and volatility in equity markets caused by the sudden outbreak of coronavirus has led to the negative fund flows in equity mutual fund schemes from the July-August months of 2020.
REIT has witnessed a whopping investment of Rs 735 crore in 2020: REIT comprises a portfolio of commercial real estate assets, a considerable portion of it consisting of leased out assets. Although, relatively new investment instruments in the Indian context, lowered interest rates post-pandemic is currently fuelling some investment in the sector.
Modified segregation of portfolio by SEBI: According to the partially modified norms related to segregation of portfolio amidst COVID19 by Sebi, the restructuring by the lenders/ investors solely due to COVID-19 related stress or under the RBI framework, the credit rating agency are not supposed to consider the same as a default event. The circular further stated that AMCs should treat the date of the proposal for restructuring of debt received by them as the trigger date for the creation of a segregated portfolio. Once the AMCs receive the request of restructuring of debt, they are to report the same to the valuation agencies, credit rating agencies, debenture trustees and AMFI (Association of Mutual Funds in India). AMFI should further disseminate the same to its members.
New directive of SEBI will impact SIPs and cheque-based transactions: The new guidelines necessitate the mutual fund houses to allocate units upon realization of funds irrespective of the ticket size. That might influence the systematic investment plans (SIPs) and cheque-based transactions. Besides, it would further bring uniformity to net asset value (NAV) allocation as it discontinues the investment limit criteria and makes it uniform for any amount of investment.
Hence are the most fundamental trends in the mutual fund market during the Covid-19 pandemic that every investor should be aware of before deciding to invest in the same. However, one should not assume it to be an exhaustive list to be able to make the right mutual fund investment decision in the current times. Consulting a professional advisor or the specialists in the field such as the in-house experts at Paisa Invest will serve an investor best.
Do you need professional assistance to make the best investment decision amidst COVID-19? Contact Paisa Invest today!
