CEO speak

The Summer of Elections: How to Keep Your Mutual Fund Investments on Track

May in India has been consumed by the Indian summers and the heat of our general elections. By the time you read this, the election results would be out. Whatever be the outcome, the larger growth story of India should continue which has gained momentum under the current ruling dispensation. India’s economic fundamentals remain strong- strong GDP growth, domestic consumption, favourable demographics, corporate results all point in the direction of growth. As a new government takes office, one would be interested in the priorities of the next government and the annual budgets that should be presented around July.

However, we understand that emotions run high during such events and that reflects in the volatility of the equity markets. But if emotions impact your investment decisions, it can often lead to suboptimal outcomes. We always recommend keeping one’s long-term goals in mind and not get hassled by short-term fluctuations. Market volatility is an inherent part of investing in the stock markets. Historical trends and data points indicate that even if the markets go through some turbulence during a general election in India, our markets have mostly shown resilience post elections.

For mutual fund investors these can be testing times, and some end up taking decisions in haste. Investors who have stayed invested during such times with their long-term financial goals in mind have benefited when the markets stabilised.

3 points to help you to navigate market uncertainties.

Financial Goals and staying invested: Having clear financial goals and staying invested for long term in the equity markets allows your investments to benefit from the power of compounding. For those investing through Systematic Investment Plans (SIPs), rupee cost averaging works in your favour in such ups and downs in the markets. With SIPs, one keeps investing a fixed amount in a disciplined manner such as month on month. You buy more units when prices are low and fewer units when prices are high, thereby reducing the average cost of your investments over time.

Diversification: If you have clearly chalked out your financial goals, your investments are likely to be in different instruments and asset classes. This is also dependent on your risk-taking abilities. Mutual funds by design offer diversification as they invest in a basket of stocks, thus potentially reducing the overall risk associated with an individual stock performance.

Professional advice: Seeking advise from professionals and advisors can help you stay informed better and cool your nerves. Financial advisors today can help you understand the market dynamics. This in turn will assist you in making informed decisions aligned to your long-term goals.

The AUM of the Indian mutual fund industry touched a record high of Rs 57.26 trillion as on 30 April 2024. Stay away from the noise and be goal focussed. Mutual funds with their diversified portfolios are well-positioned to benefit from the growth drivers.

HSBC Mutual Fund firmly believes in the India growth story, and we remain committed to bringing you the best-in-class products and services. As we have consistently believed and backed the basics of investing in many previous newsletters, this time too, we would like to reiterate the fact that one should stay invested for long term and aim to reap the benefits of the equity markets. With investment vehicles like mutual funds, you have an advantage of your funds being actively managed by professionals.

Thank you for your continued trust and support.

Note: Views provided above are based on information in public domain at this moment and subject to change. Investors are requested to consult their financial advisor for any investment decisions. The sector(s) details mentioned in this document do not constitute any research report nor it should be considered as an investment research, investment recommendation or advice to any reader of this content to buy or sell any stocks / investments.

Source: Bloomberg, AMFI, HSBC Mutual Fund, Data as on 31 May 2024 or as latest available

Disclaimer: This document has been prepared by HSBC Asset Management (India) Private Limited (HSBC) for information purposes only and should not be construed as i) an offer or recommendation to buy or sell securities, commodities, currencies or other investments referred to herein; or ii) an offer to sell or a solicitation or an offer for purchase of any of the funds of HSBC Mutual Fund; or iii) an investment research or investment advice. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall HSBC Mutual Fund/HSBC Asset management (India) Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein. This document is intended only for those who access it from within India and approved for distribution in Indian jurisdiction only. Distribution of this document to anyone (including investors, prospective investors or distributors) who are located outside India or foreign nationals residing in India, is strictly prohibited. Neither this document nor the units of HSBC Mutual Fund have been registered under Securities law/Regulations in any foreign jurisdiction. The distribution of this document in certain jurisdictions may be unlawful or restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions. If any person chooses to access this document from a jurisdiction other than India, then such person do so at his/her own risk and HSBC and its group companies will not be liable for any breach of local law or regulation that such person commits as a result of doing so.

Document intended for distribution in Indian jurisdiction only and not for outside India or to NRIs. HSBC MF will not be liable for any breach if accessed by anyone outside India. For more details, click here / refer website.

© Copyright. HSBC Asset Management (India) Private Limited 2024, ALL RIGHTS RESERVED.

HSBC Mutual Fund, 9-11th Floor, NESCO - IT Park Bldg. 3, Nesco Complex, Western Express Highway, Goregaon East, Mumbai 400063. Maharashtra.

GST - 27AABCH0007N1ZS | Website: www.assetmanagement.hsbc.co/in

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.