You already know that the budget didn’t have any specific sops for mutual funds. Does that mean it won’t have any impact on your mutual fund investments?
“Budget didn’t have anything directly impacting the mutual fund schemes. But, there were things which will indirectly have an impact on the schemes,” says Rajiv Thakkar, Chief Investment Officer, PPFAS Mutual Fund.
The finance minister’s thrust on infrastructure, fiscal discipline, etc are likely to have positive impact on both equity and debt markets. Also, implementation of Goods and Service Tax (GST) is also going to have a huge impact on the markets.
“The expectation of rate hikes is not there, so we are expecting the fixed income market to do well. It can be a good investment choice,” says Rajiv Thakkar. The finance minister’s decision to stick to the fiscal roadmap has boosted hopes for further rate cuts by RBI. If it happens, it will be a huge positive for debt mutual fund schemes, especially for long-term debt schemes.
Market pundits also believe that the non-populist and rational tone of the budget are likely to strengthen the macro-economy and boost the fortunes of equity markets.
“There is room for interest rates to go down which will definitely be good for debt markets in the short term but in longer term equities are looking good. FII outflows are coming down and the economy is looking strong. Investors can consider investing in equities for long term,” says Mahesh Patil, Co-Head Equity at Birla Sun Life Mutual Fund.
However, don’t commit the mistake of changing your investment strategy on the basis of likely returns from different investment avenues, say fund managers. “Asset allocation and goal should be your primary focus,” says Mahesh Patil. Rajiv Thakkar adds that investors should know their risk appetite before making any investment.
If you invest in sector funds, you should be cautious about export-oriented sectors like IT and pharma. “The IT and pharma sectors will depend on the international political changes”, says Rajiv Thakkar.