As mutual fund performance is dynamic; a fund that performs well today, need not necessarily perform well forever
I am investing Rs 2,500 every month in Reliance Growth and ICICI Pru Balanced Advantage Fund. My investments are for 10-15 years but I keep hearing that I should quit mutual funds as the markets are going up. If my investment is for the long-term, why should I exit it?
Sagar Bageria, Pune
When investing in mutual funds for the long-term the SIP option is preferred because it averages acquisition over various market cycles and one can benefit from the power of compounding in the long run. As mutual fund performance is dynamic; a fund that performs well today, need not necessarily perform well forever, it is for this reason that one is advised to review and track the performance of one’s investments at least once a year to ascertain its progress and compare it to its peers and benchmark. Doing so provides you with the opportunity to exit a continuously under-performing fund. Both the funds you mention are good performers and you should continue to stay invested in them. However, do track the fund’s performance at least once a year to check its progress towards your financial goal and how it fares compared to its peers.