Sybbi 003 Jain Atishya MFM

MUTUAL FUND MANAGEMENT PROJECT
STRATEGIES TO INVEST IN MUTUL FUND
Name: ATISHYA JAIN

CLASS: SYBBI
ROLL NO: 003
SEMESTER: III
CONTACT NO.: 9521531821
EMAIL ID.: [email protected]
Five mutual fund strategies to keep in mind
So, what should an investor do when markets are hitting historic highs? In such a
situation, there is a need to adopt a strategic approach while sticking to the basics of
investing.
Here are five factors an investor should keep in mind when markets are touching all-
time highs.
Avoid Lump Sum Investments In Equities:

When markets are at uncomfortably higher levels, it is better to avoid large one-time
investment in equity products. Instead, invest via systematic investment plans
(SIPs). The SIP is quite an established tool of investment for generating long-term
wealth. It ensures your investments are staggered and gives you the benefit of
accumulating units at different levels, thus averaging out your costs of investments.
2. Diversify Asset Allocation:

A rigorous and well-thought-out asset allocation is essential for investments to
succeed. It is not advisable to invest all your funds in equity products alone. Your
investment portfolio must be balanced, with funds invested across asset classes,
including debt assets. Concentrating investments to one particular asset class
increases the risk: if a particular sector or fund, or the equity or debt market as a
whole sees reverses, your entire investment could be impacted and your returns
may not be on expected lines. Diversifying spreads out the risk and minimises
shocks due to over-concentration of funds in one asset category.
3. Go For Dynamic Asset Allocation Funds:

If you are an investor whose risk-taking capacity is low to moderate but want to
invest in equity, look to investing in balanced funds with dynamic asset allocation.
This category of funds dynamically balances the asset allocation depending on the
market condition. At a time when stocks look overvalued, such funds cut exposure
to stocks and increase investments in debt products. And when markets are in the
oversold zone, these funds increase investments in equity and cut down their debt
exposure. Such an investment strategy helps investors get the benefits of both debt
and equity, and typically tends to give steady returns to investors irrespective of
market conditions.
4. Switch Between Debt and Equity Funds Via STP:

Systematic Transfer Plan, commonly known as STP, could be an effective tool in
bullish market conditions. STP is an automated way of shifting funds from one
scheme to another scheme of the same fund house. It is similar to SIP, but with the
key difference that in STP the deduction of instalment happens from your existing
scheme to the new fund you choose. It essentially means to invest the lump sum
amount in a debt fund and set the deduction date for systematic transfer to the
equity fund in a staggered manner.
At times when markets are at a high, investors who want to invest lump sum but not
at the risk of timing the market should ideally opt for an STP. Here, they can invest
the lump sum in a debt fund and then systematically transfer the invested amount to
the chosen equity fund in a staggered manner – weekly, monthly, or quarterly – over
a period of time. This helps an investor earn reasonable returns from the debt
investments, and at the same time, the regular transfer of funds from debt schemes
to equity schemes ensures they do not fall into the trap of timing the market.
5. Focus On Value Investing:

Even when stock indices are at an all-time high, there are several stocks which are
way behind their actual real worth. Value investing is an investment strategy that
involves investing in such stocks which appear to be trading for less than their
intrinsic value. Several funds have a portfolio of stocks that are undervalued but
fundamentally strong. Investing in such funds help investors tap the growth
opportunity in certain pockets of the market which remained weak despite key stock
indices at a high.
Markets are cyclic, and investing at a time when the indices are at a high makes
people wary of losses from a potential fall. However, terminating investments or
putting them on hold simply because markets are too high can hamper your ability to
meet financial goals. Instead, stay focused, diversify your asset allocation, and
utilise strategies such as SIPs, STPs, and value investing to get maximum returns
from your investments in the market.
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MUTUAL FUND MANAGEMENT PROJECT

STRATEGIES TO INVEST IN MUTUL FUND

Name: ATISHYA JAIN

Five mutual fund strategies to keep in mind

Avoid Lump Sum Investments In Equities:

2. Diversify Asset Allocation:

3. Go For Dynamic Asset Allocation Funds:

4. Switch Between Debt and Equity Funds Via STP:

5. Focus On Value Investing:

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