Slowdown shock: PPF beats mutual funds over 5 years
PPF is one of the prime investment avenues for Crores of investor’s
especially conservative ones. The average rate for PPF rate for FY 2014-2019
was about 8.2%. On the other hand, if we calculate returns for large cap mutual
funds for same period (as on 30th Aug 2019) the same is about to
7.79%. Please note that the rates are annualized. Other categories like mid-cap
and small-cap have only done marginally better at 9.51% and 9.39%, respectively.
Note Interest from PPF is also tax Free.
The assets under management (AUM) of open-ended equity funds
have increased from ₹2.5 trillion in July 2014 to to ₹6.84 trillion
at the end of July 2019, an almost three-fold expansion in just five years. Last
week, GDP growth rate for the April-June 2019 period came in at 5%, the lowest
in six years. This has hit investment by individual investors hard.
Wait ! Don’t push panic button just yet.
Does that mean all is lost for retail equity investors? One should
invest at times when growth is low and valuations are attractive and pull out
when these factors reverse," said Sankaran Naren, executive director and
chief investment officer, ICICI Prudential Mutual Fund. Warren Buffet once famously
said, that one should but when there is “Blood in market” So this is right time
to top up your SIPs
Investors should stick to their long-term allocation and shouldn't look
too much into one year figure. Modi Govt has embarked on some aggressive
changes which are bound to cause some short term hiccups. Also Banks will be
out of woods in couple of quarters which mean they can give boost to infra
activity in BIG way.
Equity returns are always volatile by definition and this situation
does not call for exit in panic. A recovery can change the picture
dramatically. Investors should stick to their long-term asset allocation and
avoid the temptation to leave for a lump sum. Also RBI has
reduced interest by 1.1%+ in last few quarters, which means PPF interest will eventually come down
below 8% soon
We urge everyone to discuss present situation of portfolio with your financial advisor and
make changes only if necessary. Stick to you long term planning. We believe
stock markets are prime to rebound which will improve your returns from mutual
fund investments
About Us
We are a neo advisory firm that believes in Goal based investment. We offer advisory services in Mutual Funds and retirement/ Life insurance domain. For any clarification / investment needs call us on +91 9325295502.
We are now on Instagram. Visit us on www.instagram.com/growwealthadvisors
#PPF #Mutualfunds #returns #interest #RBI #SIP
No comments