Looking for the Safest Investment during Situations like the Pandemic?

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Looking for the Safest Investment during Situations like the Pandemic?

We will not soon forget the year 2020. The COVID-19 pandemic has, in many ways, revealed the world and the safety we believed it to provide. Global economies have been restrained, countries have been shut down, and millions of people have lost their jobs as a result.

In January 2020, reports of this virus began to circulate. No one then could have predicted how much damage this small virus would cause to our pockets. And this isn’t even the final version. However, many professionals in the financial sector have anticipated even worse times ahead.

Preparation For Uncertainties

  • Pandemic caused a lot of volatility in Share Market as well as in the minds of Investors.
  • Due to this volatility almost, all portfolios were down to earth in covid times, which is obvious from the data below
  • Investors who actively managed their portfolios, might have entered into a strategy to wear many hats.

What Are Those Hats?

There were two choices in front of them

  1. They should shift their money in three different category funds namely Large Cap, Mid Cap and Small Cap,

So many were deviated from the Right Path to Success.

2 . There was an easy and cool way available to shift their funds to Multi Cap category.

But the first option was Herculean tasks to find right funds category wise.

We then selected some very good Equity Mutual funds which outperformed

Our Investment Strategy During Pandemic

  • We adopted the Contrarian Approach of investment during the duration of pandemic.
What is Contrarian Approach -

Contrarian investing means taking a different look at the market, doing the right research, and ascertaining whether there is a buying opportunity. Where you buy a stock that is currently undervalued.

  • We then suggested our clients to switch their money from all other schemes to the schemes that are then undervalued according to our experts’ thorough research.

Change the approach of investment to choose the right funds instantly in order to outperform all other investors even when the market is down.

  • We need to identify those schemes which are underperforming as of now and will revoke when situation gets normal.
  • We identified certain Focused Equity Funds during last pandemic slow down, and helped our clients to shift their money from nonpromising funds.
Focused Equity Fund

Focused Equity Funds are a type of Equity Mutual Fund that invests at least 65% of its assets in equities and equity-related instruments and may hold a maximum of 30 individual stocks. Investors can invest across market capitalizations, sectors, and industries. The portfolio includes higher-weighted stocks with high conviction. As a result, such investments are likely to yield high returns over the long term.

Why Focused Equity Fund?
  • Focused funds’ primary objective is to construct a concentrated portfolio by identifying the most profitable stocks and generating huge returns. As a result, the fund manager selects the best stocks for the portfolio with great care.
  • Top-down stock selection is used by focused funds. Having a long-term investment horizon is also important because it will smooth out the unavoidable ups and downs of the market and produce great returns.
  • Equity mutual funds are a great way to diversify your portfolio and potentially achieve your long-term investment goals. It also lets you take advantage of all the options on the market. To make them a part of your portfolio based on your financial objectives, you must take into account understanding the style and strategy used by Focused Equity Funds as well as the risk and return features of the fund.

Our Perfect Recipe (Focused Equity Fund) During COVID 19

Source: Advisor Khoj, as on 28th December 2022. Annual returns of Focused Equity Fund. Disclaimer: Mutual funds are subject to market risks. Past performance may or may not be sustained in the future.

The above data in itself is self-explanatory. We can look into their performances, like how Franklin India Focused Equity Growth Fund have performed since 2019 till today. In 2019 its CAGR was only 10.9%. After the entry of COVID 19 in India it doesn’t perform very well with a decline of 0.04% creating a buying opportunity for Contrarian investors but during the period of first and second wave of COVID 19 it performed drastically with the CAGR of 39.41% in the year 2021. This fund is continuing to perform with the CAGR of 9.09% in the year 2022

So, from the above data you can analyze that it requires deep study and consistent analysis to find out the right fund. Predicting its future performance and making an overview of performance of the fund.

Our team at Swaraj FinPro is advanced in quality research and analysis of quality funds and finding out the TOP funds for our clients. We are proud to say that we have gained the expertise of making the right fund analysis.

Let’s take an example: -

Source: Advisor Khoj, as on 28th December 2022. Comparison of Annual returns of Focused Equity Fund with Fixed Deposit, Gold and PPF from 1st March 2019 till 27th December 2022. Disclaimer: Mutual funds are subject to market risks. Past performance may or may not be sustained in the future.

  • In the year 2019, an investor had ₹6,00,000 with him, he divided it into two parts of 3,00,000 and invested the first 3,00,000 in (₹1,00,000 each in Quant Focused Growth Fund, Franklin India Focused Equity Growth Fund and Nippon India Focused Equity Growth Fund) funds and the remaining 3,00,000 he decided to invest 1,00,000 each in Fixed Deposit, Gold and PPF.
  • After three years that is from 2019 – 2022 the growth that is seen in the amount of first three lakh which was invested in Focused Equity Funds was drastic. Today that first three lakh amounts to ₹5,70,420 and the second three lakh amount which was invested in Fixed Deposit, Gold and PPF today amounts to ₹4,14,516.
  • He earned a surplus from the amount invested in Quant Focused Growth Fund, Franklin India Focused Equity Growth Fund and Nippon India Focused Equity Growth Fund of ₹ 1,55,904 over the amount invested in Fixed Deposit, Gold and PPF.
  • n such unwelcoming situations like the pandemic Focused Equity Fund helped the investors to outperform their traditional investment.

Focused Equity Fund with their Market Capitalization

Source: Advisor Khoj, as on 26th December 2022. Trailing returns of Focused Equity Mutual Fund with their Market Capitalization. Disclaimer: Mutual funds are subject to market risks. Past performance may or may not be sustained in the future.

  • The Focused Equity Fund’s market capitalization is primarily in the hands of the fund manager, who focuses on the analysis of the sector in growth and then plans their funds to invest in it.
  • They don’t have any mandatory criteria for placing a particular amount of funds in certain market segments, they are free to invest according to their choice and market analysis.
  • From the above data, we can see that the majority of funds are placed in the large cap segment, which provides growth with consistency.

Focused Equity Funds were very helpful and provided a large amount of growth to our investors during the period of the pandemic. As the market is always volatile and full of uncertainties, you too need to keep yourself financially updated about market situations and change your investment approach and strategy according to them.

We have been serving our clients with the best possible investment options even in the worst market situation, and all that is possible because of our team, which has expertise in facing such critical market situations.

We have prepared a Perfect Recipe of investment for the year 2023

Multi Cap Fund with their Market Capitalization:-

Source: Advisor Khoj, as on 26th December 2022. Trailing returns of Multi Cap Equity Mutual Fund with their Market Capitalization. Disclaimer: Mutual funds are subject to market risks. Past performance may or may not be sustained in the future.

  • These funds have a mandate from SEBI to invest 25% in large-cap stocks, 25% in mid-cap stocks, 25% in small-cap stocks, and the remaining 25% according to the choice and performance of the market segments.
  • These funds have lower risk as compared to other funds because when one segment of the market underperforms, the other segment balances its performance. The fund manager can shift the amount invested (25% of the remaining amount) according to the performance of the market segments.
  • It protects you from market volatility by providing diversification for your investment portfolio.
  • It protects you from market volatility by providing diversification for your investment portfolio.

Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

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