This article explores how to manage SIP investments, allocate fresh capital during a downturn, and assess bottom-fishing opportunities.

📚 Table of Contents

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• How much has the stock market fallen since the peak of 2024?
• Do not panic even if most SIPs are in the red
• Are your mutual fund investments for the long term?
• How to allocate fresh capital as a lump sum during a market correction?
• Should you bottom-fish for good opportunities?
• Do you want to look at hybrid mutual funds?
• Get a thorough mutual fund portfolio review done

How much has the stock market fallen since the peak of 2024?

Around 14% from the level of 26,277.35 (26-Sep-2024) for the Nifty 50 index.

The Nifty 50 is experiencing its longest monthly losing streak in 30 years:

In this article, we will tackle the question: What should mutual fund investors do in such a situation?

Do not panic even if most SIPs are in the red

The latest values of most short-term SIPs are currently negative:

Category	Any 1Y
Equity: Large Cap	-12.06%
Equity: Mid Cap	-16.82%
Equity: Small Cap	-24.67%

This is normal given the market correction we are seeing. However, for many investors who have started investing recently, this can be a matter of concern. But we urge such investors not to panic but instead focus on implementing the steps in this article.

Are your mutual fund investments for the long term?

A market correction is the time of reality check for those investors who believe that the stock market goes up by 15% every year like a super-charged FD.

As we have said many times before, money that is due to be spent in the next five years should not be in equity at all.

Category	Any 5Y	Any 10Y
Equity: Large Cap	12.22%	14.98%
Equity: Mid Cap	16.29%	20.49%
Equity: Small Cap	15.25%	23.61%

But beyond that period, equity can be slowly added as per your risk profile following a chart like this:

To do this in practice refer to this guide: Which are the Best Mutual Fund Categories for every Investment Horizon?

How to allocate fresh capital as a lump sum during a market correction?

A lump sum is a large chunk of money, relative to the size of your portfolio, that you need to invest.

Typical examples of lump sum amounts come from bonuses, real estate sales or other such transactions. In addition, suppose you are doing a portfolio rebalancing exercise or exiting investments that no longer meets your objectives. In those cases as well, you will also end up with a lump sum cash amount.

We will use the bucket theory of portfolio creation, also called the Arthgyaan Have-vs-need (HvN) framework for investing a lump sum amount.

We extend the concept of the bucket theory of portfolio construction to create a framework to be used in the accumulation, i.e. the pre-retirement stage when the investor has active income and is investing for future goals.

The Arthgyaan Have vs Needs framework (HvN) is a simple tool to tell you how much money you need to invest:

• for all of your financial goals
• which asset class should you invest in next

We will now break this down in simple terms. There are two important questions that investors who are investing for their goals ask:

• how much more money do I need for my goals?
• where the next rupee of investment should go into

The Arthgyaan HvN framework needs you to make a very 4x4 simple table with three asset class buckets and for each bucket asks you to calculate three numbers: the amount you already have (the HAVE column), the amount you need to reach your goals (the NEED column) and the difference between the two (the GAP column).

The three buckets are:

• equity bucket for long-term goals while beating inflation
• debt bucket to either generate income or provide stability vs the equity bucket
• cash bucket for spending on short-term goals

The columns are:

• HAVE is the total market value (at today’s prices) for the assets you own. For example, if you have 5 lakhs invested in an equity mutual fund, and as the latest NAV, the value of these funds is 8 lakhs then the value of the HAVE column is 8
• NEED is the present value of all of the goals. We will show how to calculate this
• GAP = NEED - HAVE and is the amount you need to grow your portfolio by to consider your goals to be funded

We also have a TOTALs row to give a high-level view of the portfolio.

To see worked-out examples for this framework, see How to invest a lump sum amount for your goals?

Should you bottom-fish for good opportunities?

Investopedia defines bottom fishing as looking for bargains among stocks whose prices have recently dropped dramatically.

If you are an investor with some cash available, whether money is set aside for this purpose or from a recent windfall like a bonus, temporary market declines can present excellent bottom-fishing opportunities.

We have a daily-updated list of funds that have fallen recently here: Bottom fishing tracker: which mutual funds have fallen the most?

Do you want to look at hybrid mutual funds?

Category	Any 1Y
Hybrid: Aggressive	-6.55%
Equity: Large Cap	-12.06%

Hybrid funds which mix equity and debt inside the same fund offer automated tax-free rebalancing without behavioural biases from the investor and can be more resilient during market corrections. Hybrid funds should be a core component of your portfolio. Don’t add 5-10% of your portfolio to hybrid funds and then expect resiliency since the debt allocation will be too low.

Get a thorough mutual fund portfolio review done

At Arthgyaan, we provide a free mutual fund portfolio review service available to all investors like you looking for a portfolio review for your mutual funds.

The Arthgyaan Mutual Fund Portfolio service will allow you to evaluate your mutual funds and give you mutual fund portfolio insights via an easy-to-understand report.

Please follow this guide to get a review completed: Analyse Your Mutual Fund Portfolio for Free with Arthgyaan’s Mutual Fund Review Service