MFs: A safe investment option in volatile mkt

Economy is slowly easing out of the after-effects of demonetisation, moving towards forced digitisation and is creating new ecosystem. The Q3 results are subdued and global news and markets are giving rollercoaster ride to the retail investor.

As a result of demonetisation, interest rates are falling, equity markets are volatile, realty is struggling, and gold investments are not attractive any longer. Banks have received huge fixed deposits, which need to increase advances to spur the growth.

Investment opportunities for a salaried employee in these volatile atmosphere are very limited, where he can save in small amounts, returns are tax-free and easy to liquidate. The best available option is Mutual Funds, without worrying about daily market fluctuations.

For the next three to six months, markets will be volatile and best mutual funds to invest for medium- to long-term are the following:

 Banking and financial services funds: Since last few quarters, the banking sector is being beaten down by increasing NPAs. Currently, market has discounted the losses, with new measures and focus on other compliance requirements.

Both banks and the government are working towards the betterment of Indian banks.
As banking is the major mechanism for increasing the credit availability, no country can grow without addressing banking issues. Look at current opportunity coupled with future growth potential, this is the best segment to invest in.

 Pharmaceutical funds: After Information Technology, Pharma is the only sector which earns highest foreign exchange.

Dollar is getting strengthened almost every day, and all pharma companies are trading currently at deep discounted pricing. Yes, there is risk of the USFDA, but the US can’t ignore Indian pharma companies. Generic drugs demands will be growing; which make it an attractive option to invest in pharmaceutical funds.

 FMCG funds: Irrespective of market developments, human beings can’t live without fulfilling their daily routine, thus making FMCG a daily need.

But increasing number of jobs and population growth is spurring higher consumption. Hence, investing in FMCG funds is going to be a great opportunity.

Infrastructure funds: The government has announced big plans to invest in infrastructure in the recent budget. The mess in project approvals is getting cleared and there is big push towards spending in railways and roads and transport. A small allocation you can make towards this fund.

Whether you are small investor or a big investor, stop worrying about daily market developments.

Daily market news is all about what happened till now. But as an investor you need to plan for what will be next option to invest. Go with a reasonable process rather than taking emotional decision and believing in recommendations blindly.

Investors, who are familiar with the sectorial mutual funds, can go for them directly. Otherwise, you can opt for diversified funds for medium term to long term investments.

Even if you are a new investor, start with a small amount of allocation and experience it.  You can’t enjoy India’s growth story without investing in the markets.

Don’t miss the opportunity, as this time India’s growth is coupled with digitisation and demonetisation.

Economy growth coupled with digital technology is much bigger; this is once in a life time situation and opportunity.

(The writer is CEO at InstaEMI.com)