Guided Investing

ELSS switch follow-up

Category : ELSS, Mutual Fund, Tax Saving · by Sep 10th, 2019

Last year around this time I had suggested to stop further investments in Reliance ELSS and invest fresh money in Axis Long Term Fund, in ELSS category. Let us see how that has performed.

Axis Long Term – -1.79%
Reliance ELSS – -16.26%
Nifty 50 TRI – -2.24%
Nifty Next 50 TRI – -10.99%

Let us also see how other funds in ELSS category have performed in the same period vis-à-vis the index

Aditya Birla Tax Relief 96 : -11.19%
ICICI Long Term Equity Fund : -7.07%
IDFC Tax Advantage Fund : -11.44%
Franklin India Taxshield : -6.67%

As we observe, all funds in this category have given negative returns over last year. Benchmarks were no different. Axis Long Term Fund has fallen the least in the category but fallen nevertheless. But that should not be a solace. We are looking at historical return. Going forward, story might change completely.

What can an investor do in such market environment?

  • There is no way to predict how equity markets will perform in coming years. We can only manage the factors that are in our control – which is asset allocation. Rather than worrying about US China trade war, yield curves, global market movements or dozen other variables, focus on your asset allocation. That is the only variable which is in your control. Increase/decrease allocation as per market conditions and your risk appetite.
  • Speaking of global cues, there have been reports of inverted yield curve in the US and an impending recession. Investors are a worried lot as such and reports of impending slowdown does not help the morale. Globally, markets are flooded with liquidity and slowdown should be the least of concerns. I still believe that there is nothing structurally wrong with India’s economy and the little issues cannot be corrected by the able people of this country.
  • The correction that markets are witnessing is the nature of equity markets. This is neither the first nor will it be the last. Such corrections create investing opportunities and this is what makes investing so interesting. Nobody can pinpoint when the turnaround will happen. It might happen next week, 6 months later or maybe not in a long time. Trying to pick bottoms is a fruitless exercise. Extending the discussion further, as an investor, what we can do is control our emotions. Focus on that.

Be aware and stay invested.


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