COVID-19 concerns: Don't panic, IIT Hyderabad study tells MF investors

Hyderabad, Apr 20 (): A study on Mutual Funds bythe Indian Institute of Technology-Hyderabad said investorsneed not panic as long as the net asset value (NAV) of theirinvestment drastically does not fall during the presentquarter.

Prof. Badri Narayan Ratha, faculty of the institutionhas analysed the impact of COVID-19 pandemic on theperformance of the Indian Mutual Fund Industry.

In the wake of the COVID-19 outbreak, volatility willcontinue to grip the Mutual Fund industry because of investorconcerns over the ongoing turmoil of Indian economy, the studysaid.

"Although stimulus packages announced by both theMinistry of Finance and Reserve Bank of India (RBI) mayencourage the MF investors to continue investing throughsystematic investment plan (SIP), at same time it posesuncertainty about their future cash flows and exposure ofinvestment to equity assets."

"Nonetheless, there is no need for Mutual Fundinvestors to panic as long as the net asset value (NAV) oftheir investment drastically does not die out in this ongoingfirst quarter of FY 2020-21," it said.

Investors with a continuous flow of income who areaiming at long-term investment horizons should not pull outtheir money from mutual funds irrespective of volatility inthe equity and debt funds in the short term.

Instead, the small investors may shift from theSystematic Investment Plan (SIP) to Systematic Transfer Plan(STP) in the medium term to mitigate the risk amid the COVID-19 outbreak, Badri Narayan Rath of Department of Liberal Arts,IIT-Hyderabad, said.

Mutual Funds have become the investment vehicle forpropelling wealth and widening the choice of Indias middleclass.

However, the current catastrophe amidst Coronavirus-induced nation-wide lockdown has created havoc for both MutualFund investors and the Mutual Fund Industry. GDK