Coronavirus and Mutual Fund Investment – Is it a Good Idea?

Since the spread of Novel Coronavirus, many markets have seen a meltdown like never before. From the oil market to global equity markets, COVID-19 has affected the market sentiment on a large scale. It has also contributed significantly to the high volatility of these markets.

A close look at the mutual fund investments reveals that the investors have suffered some losses across the equity categories. Some of the most affect mutual funds categories include sectors funds such as large, small, mid, multi-cap, value, hybrid, and multi-asset allocation schemes.

Coronavirus’ impact on mutual fund categories such as the energy sector has also seen a decline of a significant margin. Along with this, some of the best performing international funds have also shown a downward graph. These schemes saw massive inflow in the former months of the financial year 2019. Banking category also has seen a dip as the sector’s funds have been underperforming.

The technology sector has fallen too. But, mutual fund managers had anticipated the dip ever since the time the coronavirus started spreading in powerful economies of the world. However, the gold funds have been performing comparatively better.

All this said, the real question is, is investing in mutual funds in the time of coronavirus a good idea?

Well, there are two cases to consider when it comes to mutual fund investments.

  1. In case of investing in individual funds:

If you are planning to invest in individual funds, then, mutual fund investment isn’t something that you should consider. Mutual fund advisors believe that given the current market scenario, investors should be focusing on the short-term losses. Staying investing in your existing funds and following your current asset allocation is the best thing to do, for now.

  1. In case of mutual fund investment via SIPs:

However, if you are planning to invest in mutual funds through SIP, then, that would be a good thing to do. Systematic Investment Program (SIP) will give you an advantage of rupee cost averaging. This means you can get more asset units as the market falls. With the current situation, SIPs are likely to present you with many opportunities to earn from this pandemic. All you have to do is keep your investments rebalanced. Which means you buy assets that are underweight in the market and sell those assets that are overweight in your portfolio.

On a final note, in a situation like this, where global economies are affected, it is best to keep you finances safe. So, if it means you have to sell some units of assets, then, do so. On the other hand, if you have to buy some units of assets then, do that well in time.