At a time when markets are scaling new highs, what should equity fund investors do — redeem investments, put fresh money or stop incremental inflows?
The opinion is divided among MFDs, according to a poll conducted by Cafemutual. While 46% respondents were in favour of stopping incremental inflows in equity funds, 34% said investors should put fresh money in equity funds. The rest 20% favoured redemption.
MFDs said investors with long-term horizon need not worry about the market movement. "The decision depends on time horizon and mode of investment. SIP investors with clearly defined goals and a long term horizon have nothing to worry," said MFD Hemant Rastogi.
"If you need money in the next 1-2 years for a specific goal, it’s time to pare your exposure," he added.
Azeem Jagani of Composite Investment Services said investors who have made good profit should redeem partially.
"In case investors have made good profit (15-20%), they should redeem partially. At least what is tax free for them. That amount can be reinvested in a liquid fund and routed back to an equity fund via STP," he said.
The record-rally in stock markets has led to valuation concerns. According to a separate poll conducted by Cafemutual, most MFDs are not in favour of lump sum investment in equity funds. Most MFDs (74%) said investors should opt for a staggered approach at present. Only 10% said investors should put lump sum amount.
