In the current dynamic realm of financial investments, the sway of market trends significantly impacts the success of the best performing mutual funds. This year has been marked by major turbulent shifts in our country’s financial market and was easily driven by a multitude of factors spanning global occurrences to changing consumer habits.
The recent market trends have been notably influenced by a ton of factors, including the resurgence of specific industries post-pandemic, shifts in consumer preferences and behavior, and evolving environmental, social, and governance (ESG) considerations.
Analyzing Mutual Fund Performance
One of the most critical aspects of investment management is analysing mutual fund performance. Simply by assessing various parameters, the potential investor can gain valuable insights and factors into the strengths, weaknesses, and overall suitability of their investments.
Therefore, by understanding these parameters, investors can make well-informed decisions to optimize their investment outcomes.
How do market trends affect mutual fund performance?
Mutual funds invest in a wide array of investments available in the market. Different investment types get affected by different types of prevailing market conditions. To make it simpler, there are so many types of market risks that affect that mutual fund investment value.
- Equity Risk
If, by any chance, the price of the shares of a company increases or decreases, it’ll definitely impact the stock’s investment. This fluctuation in price translates to the value of mutual funds.
(Tip: Use a sip calculator before investing your hard-earned money. Highly recommended!)
- Interest Risk
If the central bank increases the rate of interest, it negatively impacts the bondholders. So, if you invest in any of those assets, such as debt securities or bonds, higher interest rates will render the current bonds less valuable and lose the investment.
- Inflation Risk
We all are well aware of the term ‘Inflation.’ It is a normal phenomenon in the money market and tends to decrease the value of money over time. So, if your return rate is lower than inflation, you get less real money than you invested, even if the number is higher!
- Market Risk
This is the risk of losses due to movements in the overall market. For example, economic downturns, geopolitical events, or even changes in interest rates can affect the security values held by a particular fund.
Understanding and managing these risks is crucial for investors to make informed decisions and choose funds that align with their risk tolerance and investment goals.
How to invest in top performing mutual funds in India easily?
Nowadays, investing in mutual funds is as easy as ordering food from your smartphone by simply sitting in your home. Just a few taps on the right application, and you are more than good to go.
In my personal experience, I use the Bajaj Finserv application, and this application is a total savior! It is super friendly to use and offers tons of financial facilities.
Here is a step-by-step guide:
- Download the Bajaj Finserv application on your smartphone (iOS/Android)
- Sign up using your mobile number and proceed further
- Go to the Mutual funds under the Investment Bazaar section
- Proceed as per your requirement
Conclusion
Recent market trends have significantly influenced mutual fund performance. For sustained financial growth, adapting to market dynamics remains quite crucial and investing in the best mutual funds for sip is also essential.