High returns and safety: Know why hybrid mutual funds works well for average investors
The strange thing is that the unease created by such events has been made worse for some investors because of a partial reversal of a long-standing trend. Longtime readers may have noticed my recurring observation regarding the heavy dependence of Indians on traditional fixed income investments.
It’s well known that India favours such investments, with many habitually opting for the PPF, and bank and post office deposits as their go-to savings mechanism. I’ve regularly highlighted the importance of directing at least some long-term savings towards equities or equity-oriented mutual funds.
However, an emerging trend is that a segment of the younger saver population is embracing equities with excessive enthusiasm.
New investors, who start with equity mutual funds and see positive outcomes initially, tend to shift their entire portfolios to equities. This is not a deadly mistake, but given the chain of dire global events since February 2020, it’s something that needs to be tempered.
As the pandemic eased and the conflict in Europe, and now in the Levant, has escalated, the resulting global inflation, currency fluctuations, volatile stock markets, increased interest rates by central banks, Western sanctions, China’s disease/economic struggles, waning demand, and looming recession have taken their toll. Somehow, it has left many investors, even the seasoned ones, a little breathless, and wondering if a change in investment tactics is in order.
At the start of this cycle, the response to the pandemic saw a drastic sell-off in equities, but subsequent market fluctuations have led to erratic investments driven by short-term predictions and general trepidation.
