Worried about the impact of market volatility on your equity mutual funds? Take these steps

The year 2022 has been jittery for the stock markets. Nifty 50 is down 8% for the year, and the smallcap and midcap indices have lost ground this year. The Russian aggression in Ukraine and the subsequent sanctions on Russia keep the investors on the sidelines. 

The Russian aggression further exaggerated the already high inflation, and the central banks globally have had to raise interest rates to tame the high inflation. The inflation in the USA is over 9% now, and the Indian inflation is also over 7% in June 2022. The interest rate hikes have increased the cost of capital for the investors, and the debt-laden companies are specifically impacted in this scenario.

With the high inflation keeping the liquidity tight in the future, investors feel jittery about their stock market and equity mutual fund returns. Your investment strategy is one of the pillars of your investment journey. If you are questioning your investment strategy, read the blog below to understand if you should exit your equity mutual funds or hold on to your investments. 

For investments in equity mutual funds, here is the list of Best equity mutual funds in 2022

Equity Mutual Funds- Should you exit or hold?

You should revisit your investment strategy to decide what you should do with your equity mutual funds. The following steps will help you to make a decision:-

1. Financial Planner- If your financial planner recommended the equity mutual funds, your financial planner understands your risk tolerance and return expectations. You should contact your financial planner and ask him/her to suggest a strategy.
2. DIY investor- If you take your investment decisions independently, you should understand and refine your investment strategy. If you are a long-term investor, you should stick to your equity mutual fund bets. But if you are feeling jittery, go to the next step! You should question why did you purchase the equity mutual funds in the first place.
3. Jittery Investors- If you are feeling jittery, welcome to the equity market jungle. You are not the first investor to feel scared about his/her investments. You should revisit your investment strategy to see if you have made any mistakes. If you feel that you have made some mistakes, you should refine your strategy based on recent knowledge about the bull and bear markets. When the times are good, investors usually become lenient in their investment decisions, but the bear market is a good time to refine your investment strategy. 
4. Jittery but Hopeful- If you are hopeful about the coming months, you should continue to keep your equity mutual funds and switch to the schemes you are more comfortable with. You should listen to your advice, as you are responsible for your investment decisions. If you are not comfortable with your investments, consult a financial advisor to help align your portfolio to your risk tolerance.

You can also read this Expert article to understand How to choose the best equity mutual fund as per your risk and financial goals.

The current downturn in the equity markets is because of several reasons like the Russia-Ukraine war, high inflation, increase in interest rates, etc. This is a good time to revisit your investment strategy and align your equity mutual fund portfolio with your risk tolerance.

Before investing, you can check the Differences between Focused funds and Diversified Mutual funds

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.