Behavioural finance is a branch of behavioural economics, which proposes that various psychological biases influence the behaviour of people towards their financial and investment decisions. People tend to behave differently to even similar news and events, and thus, behavioural investing takes into cognizance the influence of biases in the investment decisions.
OWhen chalking out a prudent financial roadmap, one may have several goals. It is always desirable to divide such financial goals into short-term and long-term. Long-term goals may include retirement planning, children's education, marriage, etc. Short-term goals may consist of maintaining an emergency fund, house renovation in the next six months, family vacation, vehicle purchase, etc. While equities are considered for long-term financial purposes, choosing the right investment option for short-term financial goals may be tricky for some investors.
Public Provident Fund (PPF) has traditionally been one of the preferred investment options to save taxes, as it provides fixed returns through interest income and aims to cater to long-term investment needs. Hence, it suited the preferences of conservative investors looking for assured returns. However, with the evolution of financial markets, increasing awareness of financial planning, and the availability of newer options, investors are exploring choices beyond PPF.
Mutual funds have continued to be preferred by the retail investors with sustained SIP inflows during recent times. Investors may choose from a vast universe of mutual funds, which may be primarily classified into five major categories – equity funds, debt funds, hybrid funds, solution-oriented schemes, and other funds. Different types of mutual fund schemes tend to suit investors with different variants of risk profile, investment horizon, financial goals, etc.
The outbreak of COVID-19 is being referred to as a “once in a century event” and has heightened uncertainty for many companies which have to deal with the prospect of a significant drop in their cash flows. The longer the pandemic persists, greater the risks as leveraged businesses might find it hard to service the debt or access credit.
When it comes to investing in mutual funds, data suggests that investors are highly inclined to invest in equity funds. As per the quarterly data for July - September 2022, about 9.2 crore folios featured equity schemes across the mutual fund industry, with the total Assets Under Management (AUM) of ₹14.64 lakh crores. In comparison, the number of folios in debt-oriented schemes stood at around 72 lakh. (Source: AMFI)
On July 31, 2020, the Nifty Pharma index has hit a 52-week high levels. This no doubt gives us great satisfaction considering that the Pharmaceutical sector is the largest overweight sector position in UTI Value Opportunities Fund (the Fund). Even as many of our portfolio companies were battered by the impact of the COVID-19 pandemic, this index has bounced nearly 79% from its low in Mar-2020.
Index funds are a type of funds, which aim to replicate a particular index. The fund manager does not have any individual discretion to make changes in the portfolio changes, and the portfolio can be changed only to align it with the changes in the underlying index.
Planning for the child’s career is often one of the significant financial goals for parents. It is generally conceived that one should start planning for their child’s education at an early stage. A prudent planning and investment strategy from an early stage often helps the parents to provide a broader range of education options.
A Systematic Investment Plan (SIP) is an investment option for investors to invest in mutual funds periodically. Once a SIP is registered, the investment amount is automatically deducted from the bank account on the specified date and invested in mutual funds. This allows investors to make consistent investments towards their financial goals.
