As the stock market is hovering around all-time high, there is lot of noise in the street: book profits, take some money out, sit on cash, and so on. Sure, markets getting into untested territory worries may investors, especially investors in stocks and daily traders. But should it worry mutual fund investors too much?
"Nobody can predict what's going to happen in the market," says Rajeev Thakkar, Chief Investment Officer, PPFAS Mutual Fund. "No one can be sure about the downfall. The bull run might continue," he adds.
Indeed, nobody knows for sure what would happen once the market breaches its previous high. There might be a nervous correction, but it need not last if the sentiment stays positive.
"There is a difference between traders and investors. Traders need to be vigilant about booking profits at the right time, not the investors," says Akash Singhania, Head Equities, DHFL Pramerica AMC. "For investors, such market phases will come and go. They should stay invested."
Singhania ask mutual fund investors to leave the job of worrying about the market and taking calls on booking profits to the fund manager. "Investors should not panic due to the noise around them. Market will touch new highs everyday and it will see corrections as well. You need to trust that your fund manager will take necessary calls when an emergency arrives," says Singhania.
That indeed is the biggest difference between a mutual fund investor and a direct investment in stocks. A mutual fund investor is paying the fund manager to book profit or buy more of the same stocks, whereas a direct investor in stocks should do all that herself.
Also, mutual fund investors shouldn't get nervous about doomsday theories, say experts. "The theories are there but you can never predict things in the market. The Indian story is going good and the economy looks strong. Chances of the equity markets falling are less," says Singhania. "Having said that I would maintain that the correction can come anytime," he adds.
"Investors should keep investing and not think about the events happening in the market. Over a long period, the investments will give you rewards," says Rajeev Thakkar.
The original article could be seen here.