Should You Invest in Equity Funds Now?

After a turbulent beginning to the year, the Indian equity market has experienced a remarkable surge in the past three months, propelling equity indices like the S & P BSE Sensex and the Nifty 50 index to new all-time highs. The Mid-Cap and Small-Cap indices have also achieved fresh peaks during this period. The record-high levels in the equity market have definitely bought cheers to investors who have kept faith in the equity market despite the tumultuous 18 months prior to March 2023. 

For those of you who have been waiting on the sidelines or contemplating investing additional funds, the question arises whether to time the market entry during a correction or to continue with regular investments. As a long-term investor, my advice is not to focus on timing the entry as it may have minimal impact on your overall returns. Let’s consider the data: Over the past 10 years, mid-cap funds have shown an average annualised return of 20.1 per cent while the one-year return stands at 22.8 per cent.

Similarly, for small-cap-dedicated funds, the one-year average return is 26 per cent while the 10-year average is 23 per cent. These figures illustrate that waiting for a correction may not yield significant benefits. Instead, the prudent approach is to invest in a staggered manner, which helps mitigate interim volatility. Employing a systematic investment plan (SIP) can be an effective way to participate in the ongoing market rally and capitalise on the future growth potential of equities. In our cover story, we delve into why equity investments are the preferred choice for many retail investors, and we encourage you to join them if you haven’t already. You can select investment categories that align perfectly with your risk tolerance, ensuring a personalised approach to wealth creation. Embracing equity as a long-term investment avenue holds tremendous potential for meeting your financial goals.

Shashikant Singh
Executive Editor