Mutual fund investors lose up to 10% in September as Nifty falls. What should investors do?

Mutual fund investors lost up to 10% in September with the benchmark index - Nifty 50 down 5.56% in the same period, an analysis by ETMutualFunds showed. There were nearly 666 funds in the said time period of which 634 funds delivered negative returns indicating that nearly 95% of the funds delivered negative returns.

The top five losers were tech sector based funds with three funds losing over 9%. Tata Digital India Fund lost the most at around 9.80%, followed by HDFC Technology Fund and WOC Digital Bharat Fund which lost 9.30% and 9.28% respectively in September.

The other two tech sector based funds were ICICI Pru Technology Fund and Tata Nifty India Digital ETF FoF which lost 8.94% and 8.82% respectively. Groww Nifty EV & New Age Automotive ETF FOF delivered a negative return of 8.75% in September, followed by SBI Quant Fund and Aditya Birla SL Digital India Fund that lost 8.70% and 8.65% respectively.


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Franklin India Technology Fund and DSP Banking & Financial Services Fund delivered negative returns of 7.81% and 7.74% respectively. ICICI Pru Nifty EV & New Age Automotive ETF FOF lost 7.18% in the said time period.

Two ESG theme based funds - Baroda BNP Paribas ESG Best-in-class Strategy Fund and WOC ESG Best-In-Class Strategy Fund - delivered negative returns of 6.78% and 6.76% respectively.

Two funds from Baroda BNP Paribas Mutual Fund - Baroda BNP Paribas Business Conglomerates Fund and Baroda BNP Paribas Focused Fund - lost 6.57% and 6.54% respectively.

HDFC Mid Cap Fund, the largest mid cap fund based on assets managed, lost 6.40% in the month of September. Aditya Birla SL MNC Fund and Edelweiss Flexi Cap Fund delivered a negative return of 6.21% each in the said time period.

Four funds - Sundaram Mid Cap Fund, Edelweiss Mid Cap Fund, WOC Banking & Financial Services Fund and ICICI Pru Mid Cap Fund - lost 6.11% each in September. The Wealth Company Flexi Cap Fund delivered a negative return of 5.91% in September.

Two large cap funds - HDFC Large Cap Fund and WOC Large Cap Fund - lost 5.82% each in September. JioBlackRock Large Cap Fund delivered a negative return of 5.54% in the said time period.

Three funds - Kotak Focused Fund, Aditya Birla SL Large Cap Fund and Edelweiss Small Cap Fund lost 5.41% each in September. Parag Parikh Large Cap Fund delivered a negative return of 5.37%.

ICICI Pru Business Cycle Fund, a sectoral fund. Delivered a negative return of 5.24% in the mentioned time period, followed by four funds that lost 5.21% each. HDFC Transportation and Logistics Fund lost 5.12% in the said time period.

Two funds from HDFC Mutual Fund - HDFC Flexi Cap Fund and HDFC Diversified Equity All Cap Active FOF lost 5.05% each in the said time period. Bajaj Finserv Large & Mid Cap Fund, Mirae Asset BSE India Defence ETF FOF and JioBlackRock Sector Rotation Fund were down 4.80% each in the said time period.

JioBlackRock Flexi Cap Fund delivered a negative return of 4.76% in September. Nippon India Growth Mid Cap Fund, the fund with highest NAV, lost 4.60% in September. Abakkus Flexi Cap Fund delivered a negative return of 4.51% in the mentioned period.

Two funds from Edelweiss Mutual Fund - Edelweiss Business Cycle Fund and Edelweiss Multi Asset Omni FoF - lost 4.47% and 4.46% respectively. Helios Mid Cap Fund lost 4.15% in the said time period.

HDFC Defence Fund, the only actively managed fund based on the defence sector, delivered a negative return of 3.47% in the said time period. AlphaGrep Flexi Cap Fund lost 2.75%, followed by HSBC Small Cap Fund and Abakkus Small Cap Fund which lost 2.73% and 2.71% respectively.

Parag Parikh Flexi Cap Fund, the largest active and flexi cap fund based on assets managed, lost 2.33% in September. HSBC Income Plus Arbitrage Active FOF lost the lowest of around 0.01% in September.

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Positive performers

Around 32 funds delivered positive returns in September. Samco Small Cap Fund delivered the highest return of 6.62% in September followed by Motilal Oswal Digital India Fund which gave 4.85% in the same period.

Bank of India Small Cap Fund delivered a return of 0.65% in September. Axis Income Plus Arbitrage Omni FOF and Tata Income Plus Arbitrage Active FOF gave 0.01% each in the same period.

What should investors do now?

Prasanna Pathak, Deputy CEO, The Wealth Company Mutual Fund told ETMutualFunds that the current environment calls for a balanced and asset-allocation-led approach rather than making a binary choice between Indian and international equities. For investors with a long-term horizon, equities remain an important component of wealth creation, but the recent volatility makes staggered deployment and portfolio diversification particularly relevant.

Within Indian equities, investors should focus on businesses with sustainable earnings growth, strong balance sheets, healthy cash flows and reasonable valuations rather than chasing short-term momentum. The structural drivers of India's economy remain relevant, although market returns over shorter periods can diverge significantly from underlying economic fundamentals and investors should continue with disciplined, staggered investing, maintain diversification across asset classes and geographies, and periodically rebalance towards their strategic allocation, Pathak said.

Rajan Sarkar, Director & Unit Head, Anand Rathi Wealth Limited shared with ETMutualFunds that investors should focus on domestic equity, with a diversified allocation across market capitalisations.

“At current market levels, both SIP and lump sum can be used as a strategy to invest. Investors can maintain 50 to 55% in large caps, 20 to 25% in mid caps and the balance in small caps in the equity portion to ride all market cycles smoothly,” Rajan Sarkar further said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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