The year 2020 was a more dramatic roller-coaster ride for investors. Covid-19 pandemic-induced stock market crash in March gave rise to heavy net outflows from the equity segment of the mutual fund’s industry. Mutual fund schemes are considered one of the best investment options due to their manifold benefits. As we entered 2021, the Mutual Fund industry witnessed more retail participation from smaller cities in particular. If you are looking forward to maximizing returns by including mutual funds in your investment portfolio, here are key trends that should not be missed in 2021-
- International Investing- International investments are gaining the attention of Indian investors. With the mutual fund industry introducing funds that invest partially in foreign stocks, the mix of global and domestic investments offers many moderate risk-takers the boost required to increase the exposure of portfolio in foreign stocks. This spells benefits for retail investors looking forward to adding foreign investments to their portfolio but don’t have the self-confidence to manage or keep an eye on their assets regularly, as fund managers look after that aspect.
- Roll-down maturity – This is an emerging mutual fund trend. This trend could significantly prove beneficial for conservative investors in the Indian markets. In general, conservative investors opt for debt mutual funds. With debt mutual funds in India not explicitly guaranteeing returns, many retail investors look forward to safe investments with a fixed interest rate such as fixed deposits or bonds. This is where the term Roll-down maturity steps in. It implicates stipulating a target maturity date and holding bonds whose maturity corresponds to the date in question. This lets a fund’s returns be predictable, provided it is held until the target date, even if it is not explicitly guaranteed. Simply put, investors get a clear scenario of the kind of returns that can be expected by investing in debt funds.
- Short-duration funds– The pandemic surely highlighted the significance of liquidity. After witnessing a roller-coaster ride last year, investors are focusing on asset allocation and diversification. This has also pushed the idea of balancing portfolio with long-term, locked-in assets, and more liquid options. So, short duration mutual fund is another essential trend to keep an eye on in 2021. One can select short-duration funds from numerous available options out there.
With an idea about trends that will gain traction in the mutual fund industry in 2021, one can be watchful while making investment decisions this year. It is always recommended to take professional help to make wise decisions to invest in equity funds or select the kind of mutual funds to invest in depending on your personal future goals. Remember, with savings, you can build a good corpus. However, with proper planning and wisely chosen investment instruments, you can maximize returns and build wealth more exponentially. Make smart decisions, keep an eye on trends in the Mutual fund market, and you will surely get good returns over time.