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Where to begin investing in a bear market
Why are retail investors running from the markets? With equities witnessing significant correction in their prices,
the risk/reward ratio is always in favor of those who invest at the lows of bear markets. Yes, it requires quite a
bit of courage to enter markets when it is so volatile. Also, given the amount of extreme pessimism prevalent in
markets, the fear of marking tanking further lower can never be ruled out. However, investors need to realize
that opportunities like these seldom arise again and again. To mitigate the risk up to a certain extent, investors
can spread their investments over a few months to avoid being caught in case of further downside.
A commonly observed phenomenon is that large cap stocks tend to recover much earlier than their mid and
small cap counterparts once out of a bearish cycle. Funds which exclusively focus on large cap stocks are
usually less prone to volatility unlike mid and small caps which make them a safer bet. Hence, investors
entering equity markets should contemplate investing in diversified large cap oriented funds.
Investors, however, need to make the right choices while choosing funds. As there are plenty of funds available
to investors in this category, selecting funds with a good track record are necessary in order to enhance your
returns. During uncertain times like these, investors need to choose funds which provide good risk management
techniques, great stock selection and consistent returns.
In a bull market, anything that is touched turns to gold. It’s only in a bear market when the good ones stand tall
and actually prove their worth. No wonder funds like HDFC Top 200, Kotak 30, HSBC Equity and DSPML Top
100 Fund have time and again proved themselves. The funds focus on large cap equity stocks and have been