As the holiday season approaches, many are looking for smart investment options, and mutual funds present a compelling choice. Unlike seasonal trends, mutual funds are an ‘all season’ investment plan, suitable for various financial goals and market conditions.
The Mutual Fund Industry’s Assets Under Management (AUM) have expanded significantly, from ₹22.24 trillion in 2018 to ₹46.72 trillion as of October 31, 2023. The rising trend indicates growing trust and enthusiasm in mutual fund investment. This makes it a favourable time to broaden your portfolio with mutual funds.
What are Mutual Funds?
Mutual funds gather money from several investors to invest in stocks, bonds, and other assets. They’re managed by financial experts and help diversify investments.
For example, a mutual fund could invest in a blend of technology stocks, government bonds, and real estate assets. It aims to provide a balanced mix of growth and stability to its investors.
Best Performing Indian Mutual Funds 2023
As we approach the holiday season, it’s worth exploring some of the best-performing Indian mutual funds of 2023.
Here’s a quick glance at some of these top-performing funds:
| Fund Name | 1 Yr Return (%) | 3 Yr Return (%) |
| Nippon India Large Cap Fund | 34.57% | 25.34% |
| Edelweiss Large Cap Fund | 28.39% | 18.69% |
| HDFC Top 100 Fund | 28.04% | 21.24% |
| Invesco India Largecap Fund | 27.5% | 17.22% |
| SBI Bluechip Fund | 26.93% | 18.82% |
The Influence of Festive Seasons on Stock Market Performance
The festive season often brings a unique influence on the stock market, with phenomena like the “Santa Claus rally” taking centre stage. Coined by Yale Hirsch in 1972 for the Stock Trader’s Almanac, the “Santa Claus Rally” describes a specific stock market phenomenon. It refers to the usual uptick in the stock market during the last five trading days of the year and the first two days of the new year. Historically, this phase has witnessed a boost in stock prices 79.2% of the time, notably in the S&P 500, impacting mutual fund investment decisions.
Factors contributing to this rally include:
- End-of-year tax considerations
- Seasonal optimism
- Increased holiday shopping
In India, similar trends can be observed, though they may align more with local festivals like Diwali. The festive spirit, combined with unique market dynamics during these periods, often leads to an uptick in market activity and investor interest.
Crucial Steps Involved in Mutual Fund Selection
Selecting the right mutual funds requires careful consideration and strategy. Here’s a quick guide to help you navigate through the process:
- Define what you want to achieve with your investment.
- Understand your risk tolerance level before investing.
- Look for funds that offer flexibility in terms of investment and withdrawal.
- Know the fund’s strategy and if it aligns with your goals.
- Lower expense ratios can potentially lead to better net returns.
- They usually have lower costs compared to regular plans.
- Be aware of any charges incurred when entering or exiting the fund.
- Understand the tax implications of your investment.
Frequently Asked Questions
How often can you withdraw from a mutual fund?
An open-ended mutual fund allows the flexibility to withdraw funds as needed, without any restrictions on the timing of withdrawals.
When is it ideal to make a mutual fund investment?
A good time to invest in mutual funds is when the NAV is notably lower than the usual unit price.
Can you invest in mutual funds at any time?
Yes, you have the flexibility to invest in mutual funds whenever you wish, providing convenience to investors.
Is it possible to invest in mutual funds during holidays?
Absolutely, you can make mutual fund investments on holidays through online channels.
What is the recommended duration for staying invested in mutual funds?
The investment period in mutual funds should align with your financial objectives and the prevailing market scenarios.
What’s the optimal date in the month to invest in mutual funds?
Choosing when to invest in mutual funds varies; some favour the beginning of the month, while others lean towards the month’s end, especially considering the volatility around F&O settlements.
Is it beneficial to invest in mutual funds monthly?
Investing in mutual funds on a monthly basis is a sound strategy to accumulate a significant amount over time.
How much should you invest monthly in mutual funds?
A balanced financial plan typically involves allocating about 30% of your monthly income to savings, which can include mutual fund investments.
What’s the ideal investment duration in mutual funds?
Your investment tenure in mutual funds should be based on your financial aspirations and the overall market trends.
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Disclaimer: Investments in securities markets are subject to market risks. Read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory.
