Mutual Fund Investing Strategies You Can Use in all Market Conditions

Owing to the dynamic economic environment and market volatility, investing in mutual funds can be tricky for investors. However, there are some smart strategies that individuals can employ today to maximise their portfolio returns and achieve their financial goals. 

Top 3 Mutual Fund Investment Strategies

Here are some of the most influential investment strategies that mutual fund investors can opt for in a volatile market:

• Investment through SIPs and STPs

A systematic Investment Plan (SIP) is the process of investing in a mutual fund on a regular basis. One can invest a particular amount at regular intervals in any mutual fund scheme. One of the most significant benefits of investing via SIPs is rupee cost averaging. 

Through rupee cost averaging, one can buy more units when the market is down and buy less when the market is up. Investing through SIPs under such market volatility will effectively reduce one’s average cost of investment.

SIP makes sure one gets more mutual fund units at a comparatively lesser price in the long run. It is one of the smartest ways to invest in mutual funds when there is much uncertainty in the market.

Alternatively, one can also invest through a Systematic Transfer Plan (STPs). While SIP means transferring money from a savings account to a mutual fund, STP involves the transfer of money from one mutual fund scheme to another. 

By opting for an STP, investors can transfer a predetermined amount from one mutual fund scheme to another at fixed intervals (monthly, quarterly, half-yearly, etc.). Similar to a SIP, a systematic transfer plan comes with the benefit of rupee cost averaging. 

• Investing in a Balanced Way

Another efficient strategy for mutual fund investors is to keep your mutual fund investment balanced according to your risk appetite.

You can invest in multiple asset classes and sub-classes which ensures a diversified portfolio, thus mitigating financial risk.  One can either invest in different mutual funds catering to different asset classes or equity classes or you can invest in a mutual fund that gives your a multi-asset pre-curated option.

• Investment in Sector Funds

A sector fund invests in specific sectors or industries only. It can be a risky investment. Regardless of the market conditions, there would be some industries or sectors that would perform well in comparison to other sectors and your sectoral fund can be on any side.

Sectoral funds are on the riskier side hence incorporate that into the risk appetite

Some of the popular sector funds cover:

• Pharmaceuticals
• Banking
• Infrastructure
• Logistics and transportation 
• Information technology