Equity Mutual Funds: What Investors Could Do When Returns From Stock Market Falls

Stock market has been falling and showing weakness over the last few months.

- Sanjeev Puri

Although the returns of equity mutual funds have been dwindling over the past few months, the longterm returns are still decent by any standard. 3-year and 10-year return of large cap and mid cap funds is above 13 per cent on an annualized basis. What it also shows is that irrespective of market conditions in the short term, the long term returns in equities can be considered to beat inflation and deliver higher inflation adjusted return than other assets.

Currently, the market is not showing strength owing to several macro factors at play. The economic conditions may take time to change but companies will adapt to the required changes much earlier. The markets may reverse, and show stretches much earlier than the true picture of economy changes. Therefore, as a long-term investor it is better to stay invested and not try to time the market. It is the time in the market that matters for generation of high returns in the long run. Markets are bound to turn volatile and be unpredictable. As a mutual fund investor, here are a few things to follow to minimize the impact of market turbulence and reap the benefits of long-term investing.