Do not chase funds based upon their short-term performances
23-Feb-2011 •Research Desk
I invested in JM Basic, JM Contra, and JM Mid-Cap fund in October 2007. The have been poorly performing since January 2008 and I have lost heavily. Should I hold on to these funds? Please advise
– Lakshman Shreshta
You bought these funds just as the markets were approaching the peak before the downturn of 2008. One con understand the loss that you are facing and its impact on your finances. However, you need to realise the opportunity loss that you have faced by not exiting these funds and investing elsewhere to cash on the market rally from March 2009. It's not too late for you to bring discipline into your investments.
The lesson for you is that investing works well if it is systematic and regular and not a one-time exercise. In our view, you may exit all these three funds and invest in funds that have provided consistent returns. Select funds that are likely to give stable returns and avoid investing in lump sum and choose the SIP route instead.