Right now the tension between India and Canada is in the headlines. Earlier, tension between China and Taiwan had come to the fore. The war between Russia and Ukraine continues in Europe. These issues also create challenges on the economic front. Apart from this, there are many factors, which may be temporary, but they have an impact on the market. Meaning, all these factors affect the market, which affects the returns of investors. In such situations, Opportunities Funds prove to be of great use.
Overcome these challenges well
Opportunities Funds have recently overcome the Corona epidemic, lockdown, high inflation, interest rates. Factors like increase in GDP, Russia-Ukraine conflict, rise in crude oil prices and NBFC crisis have been successfully overcome. Such funds have also given the best returns in the last 3-4 years and across all equity categories.
2 Examples of Opportunities Funds
For example, ICICI Prudential India Opportunities Fund If someone had invested Rs 1 lakh at the time of its inception i.e. in January 2019, then this amount would have now become Rs 2.38 lakh. Meaning this fund has given a CAGR return of 20.7 percent. Similarly, Kotak Equity Opportunities Fund has given a CAGR of about 16 percent. On the other hand, the benchmark Nifty 50 has given a return of 15.5 percent during this period.
This is how Opportunities Fund works
Opportunities Fund successfully diversifies its portfolio by buying those companies, Which are in decline or close to decline due to temporary challenges. This strategy provides better returns to investors, as strong companies often face special circumstances and challenges, resulting in sharp increases in their prices.
Better option for such investors
It is also worth noting that these funds show a fund’s performance compared to its benchmark during rising and improving markets, despite market volatility. Opportunities funds can be a suitable option for investors who can take higher risks to earn better returns in the long run. Investors can consider the fund as part of their satellite portfolio after speaking to a financial advisor or mutual fund distributor. Invest in circumstances. After the market downturn in March 2020, this fund bought shares of power, telecom and metal companies, even though they were all out of favour. In this way the fund then earned good profits. Similarly, the fund had significant exposure to the sector ahead of banks’ balance sheet strengthening beginning in 2021.
Disclaimer: The information provided here is for informational purposes only. It is important to mention here that investing in the market is subject to market risks. As an investor, always consult an expert before investing money. ABPLive.com never advises anyone to invest any money.
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