Relying on a single asset class increases risk. A mix of equity, debt, and other investment types helps absorb market shocks.
Stock markets around the world are going through a tough phase right now. Indian benchmark indices also witnessed some of the steepest falls in the last couple of weeks. While markets rise and fall, that does not mean investments need constant adjustments. According to Sarvjeet Singh Virk, co-founder & MD, Shoonya by Finvasia, a well-thought-out approach helps navigate uncertainty and turn challenges into opportunities for mutual fund investors. Here are three ways that can help mutual fund investors to tackle the market turbulence.
1. Staying Invested Strengthens Long-Term Gains
Market fluctuations may seem unsettling, yet history shows that recoveries follow downturns. The 2020 crash led to steep declines, but those who remained invested saw their portfolios regain strength in the following years. Investors who withdrew were locked in losses, while disciplined investors benefited from the rebound.
“Systematic investment plans (SIPs) work best when contributions continue through different market cycles. When prices drop, each installment buys more units, lowering the average purchase cost and improving returns over time. Reviewing financial goals provides clarity on whether staying invested aligns with long-term objectives,” Virk said.
2. Diversification Brings Stability
Relying on a single asset class increases risk. A mix of equity, debt, and other investment types helps absorb market shocks.
“An investor focusing only on mid-cap and small-cap funds experiences higher volatility. A combination that includes large-cap funds, debt instruments, or international funds provides balance. Gold and fixed-income investments perform well in uncertain times, offering an additional layer of security. Reviewing asset allocation ensures investments remain aligned with financial goals and risk tolerance,” he added.
3. Market Corrections Create Buying Opportunities
Falling prices often trigger fear, but downturns also allow investors to accumulate quality assets at attractive valuations.
Past corrections, such as in 2008 and 2020, highlight how those who invested during difficult periods saw strong recoveries. A large-cap fund priced at ₹100 per unit dropping to ₹80 becomes an opportunity to accumulate more units at a better value.
Setting aside funds for market corrections makes it possible to invest more when valuations become favorable.
