Is There A Right-Time To Invest In Equity Mutual Funds? When Is The Best Time? How Can You Invest To Get The Best Return?

You should invest in equity mutual funds at the right time to get the best return. Why does the timing matter? When should you enter a market? Should you invest in lumpsum or through SIP mode? Is it prudent to buy an equity mutual fund having high NAV? Get answers to all these queries in the next sections.

Performance of Equity Mutual Funds In Last 1 Month: Statistics

Let’s start our discussion by checking out the returns provided by various equity mutual fund categories in the last 1 month (as of April 24, 2023).

• Mutual funds investing mainly in banking sector stocks gave a maximum return. In the last one month, their return is 6.84%.
• It is closely followed by Auto Funds, whose last 1-month return is 6.09%.
• Pharma sector mutual funds gave a 5.15% return in the last 1-month.
• Thematic energy fund’s return in the last one month is 4.32%.
• Equity funds as per market capitalisation also gave a return of over 4%:
  • Large-Cap Equity Fund: 4.06%
  • Large & Mid-Cap Equity Fund: 4.21%
  • Mid-Cap Equity Fund: 4.36%
  • Small-Cap Equity Fund: 4.18%
  • Flexi-Cap Equity Fund: 4.13%
  • Multi-Cap Equity Fund: 4.1%
• Value Equity Fund’s return in the last one-month is 4.18%

You must consider the market cue if you are still sitting on the sidelines with your surplus money to invest at the opportune time.

Should You Invest in Equity Mutual Funds Now?

Signs Of Positivity

The equity mutual funds have given a return of around 4-to-7% in the last one month. It reflects that signs of positivity have started to spread in the equity market.

Attractive For Long Term Investment

Many financial advisors and fund managers believe that the recent slump in the Indian equity market has made the stocks attractive for investment. They believe the equity market in India has become extremely attractive for long-term investors (who want to invest for 3-7 years or above). Many experts recommend their clients invest in select mutual fund schemes investing in mid and small-cap equities.

Remain Cautious In The Short Term

Though the upside is attractive in the long run, you should be cautious while investing currently.

There are four main reasons why you should invest cautiously now:

1. Global inflation is still high
2. The threat of ascending interest rates remains
3. Ukraine-Russian war is continuing (keeping the global geopolitical scenario unstable and uncertain)
4. RBI’s future moves regarding repo rates remain uncertain

Also Read: New Equity Mutual Fund Rule You Must Know Before Investing in 2023

What Do Experts Suggest Regarding The Right Time for Investing in Equity Funds?

Most investment advisors acknowledge that uncertainty in the market remains. However, they believe that it is only a matter of time before the market will bounce back again. You should do it now if you have yet to invest your surplus funds in the equity mutual funds and the stock market. If you are unsure about the timing, you should invest a part of your surplus fund in equity funds.

Where To Invest? How To Invest?

You should start investing in equity-mutual-funds based on the following factors:

1. Your goals
2. Your risk profile
3. Your time horizon for investment

Are you a conservative investor?

If yes, start investing in large-cap or blue-chip mutual funds.

Are you a moderate risk-taking investor?

If yes, you may select flexi-cap funds to park your money.

Are you an aggressive investor?

Mid- and small-cap mutual funds are best if your risk-taking profile is high.

Also Read: Top 10 Equity Mutual Funds To Invest in 2022

SIP Or Lumpsum Investment

• Both conservative and moderate investors may also go for long-term SIP of equity funds. This will help you average out the risk factors of the market and get a decent return in the long run (3 years or more).
• If you are a risk lover and your investment horizon is long-term, you can invest lumpsum to get a high return in the long run. The market is bottoming out, and you can make a significantly large amount of money if you invest a lump sum amount of money for 3-7 years or more.

Should You Invest In High NAV Equity Mutual Funds?

Yes, you can invest in high NAV equity mutual funds. When the NAV is high, you get less number of units. The return of an equity fund doesn't depend on high or low NAV. It depends on the overall return given by the equities in which the fund manager has invested. Don't get bothered by the NAV value. Always check the past performance (1-year, 3 years, and 5-years) of the fund, the size of assets under management, equities in which the fund is investing, and other fundamental/technical factors before investing.

Also Read: Equity Mutual Funds: How To Choose The Best One?

Final Words

After the Hindenburg-Research report was published on January 24, 2023, the Indian stock market corrected by over 5% till the end of March 2023. Consequently, most equity mutual funds' NAV value has also corrected significantly in 2023 YTD (year-to-date). The market again started to rise in April 2023. Though the global factors are still uncertain currently, the time is ripe for the market to scale new heights in the long run. If you want a high return in 3-to-7 years or more, you may invest all or a part of your surplus fund in equity mutual funds now.

Also Watch: Mutual Fund Investment Tips In 2023

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.