April 13, 2025

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SIPs IN THE AGE OF VOLATILITY

FOR YEARS, New Delhi-based Ashish Kumar, 30, steered clear of the stock market, wary of its unpredictability. But as the post-Covid bull run became a hot topic at gatherings of family and friends, temptation got the better of him. "I invested large sums in equity mutual funds last year, expecting solid returns. But I'm staring at massive losses. I don't know whether to cut my losses or stay invested. The steep decline in my portfolio has started affecting my sleep," he says, frustration evident in his voice. On the other hand, Rashmi Tewari, 42, from New Delhi, is calm amid the turbulence. The seasoned investor is continuing her systematic investment plans (SIPs) without a second thought. "I've been investing for 18 years. I've seen the global financial crisis, the Covid crash, and countless market swings. I've learnt that equity markets are cyclical. Patience is the key. You have to just wait for the tide to turn," she saysTwo investors, two contrasting mindsets--one anxious, the other unwavering in conviction. Their experiences reflect the broader sentiment in the market where new entrants are learning first-hand that the stock market isn't a one-way street to profit"The market today has two types of investors. Those who have been around for years and don't panic. They see this as an opportunity to invest more. But the newer investors, especially those who have joined in the last few years, are feeling jittery. Many, particularly those investing through online platforms without a clear plan, are unfamiliar with volatility. When markets fall, their first instinct is to pull out. That's why we have seen some redemptions," says A. Balasubramanian, Managing Director & CEO, Aditya Birla Sun Life Mutual FundThe numbers tell the story. According to the Asso-

TIME TO SHIFT GEARS?

TRENDS DICTATE MANY aspects of our lives. Nowhere is this more visible than in the fast-moving world of investing. Take sectoral funds. In FY25 (till February), net inflows into these funds soared more than 200%. Thematic or sectoral funds--equity schemes investing in specific sectors of the economy--received net inflows of `1.46 lakh crore between April 2024 and February 2025 as against `46,138 crore in FY24. What fuelled this growth? Some attribute it to governmentbacked initiatives such as productionlinked incentive (PLI) schemes, Make in India push and initiatives towards `Viksit Bharat'. After all, among the most soughtafter funds were those investing in public sector undertakings (PSUs) and manufacturing/defence companiesBut the reversal has been real swift too. Monthly data indicates that after falling 41% to `9,017 crore in January, net inflows into sectoral and thematic funds declined nearly 37% to `5,712 crore in February. Money managers say the reasons for the dip are reduction in new fund offers (NFOs) and heightened market volatility. This raises an important question: Will sectoral funds continue to attract inflows, or is it time for investors to shift strategy and explore alternatives in underperformers like large-cap funds? Deepak Ramaraju, Senior Fund Manager of asset management company Shriram AMC, says one must wait and watch. "Investors should exercise cau- tion given the cyclical nature [of these funds], be selective and monitor macroeconomic trends and sector-specific developments. Diversification and a keen awareness of market trends will be essential," he saysMeanwhile, sectoral and thematic funds saw new fund offers (NFOs) of `73,593 crore during April 2024-February 2025 compared to `1 lakh crore raised by the mutual fund industry from overall NFOs during this periodGaurav Misra, Head-Equity, Mirae Asset Investment Managers (India), says themes such as manufacturing, innovation, and energy accounted for 55% of the funds raised. Going forward, investor participation may slow down as many adopt a `wait and watch' approach amid market uncertaintyChandraprakash Padiyar, Senior Fund Manager, Tata Asset Management, says 2025 started on a different note as momentum was subdued. "We believe the next few years could be favourable for bottom-up stock selection and, hence, sectoral or thematic investing may not be advisable. Diversified funds would be a better choice," he saysA DEEP DIVE Mutual funds that invest in PSUs, which delivered 32% annualised return in three years till March 21, 2025, have underperformed other major categories in the past year. On average, PSU mutual funds have gained 4.23% in the past 12 months till date, as per data available with financial services company Value Research. Data shows that funds from the sector showed that Aditya Birla Sun Life PSU Equity declined 0.42%, while Quant PSU and ICICI Pru PSU Equity funds rose 1.57% and 5.27%, respectively. On the other hand, CPSE ETF and SBI PSU Fund gained 10.29% and 8.28%, respectively"PSU stocks on an average have had a great run since Covid. Some PSU companies, especially in defence, delivered high earnings growth, leading to a large