The current high-interest rate regime has battered markets worldwide. Even though the Indian market has resisted the rate heat better over the last 12 months, mutual funds investing in 'growth' style of investing haven't. Before you proceed, we'd suggest you don't get confused with the "growth funds" nomenclature. These are basically funds that are suitable for long-term growth, which is why we have bunched flexi-cap funds, large- and mid-cap funds, and value-oriented funds in this bucket. It is important to acknowledge that these funds often invest in both "growth" stocks (companies that have a strong focus on growth) and "value" stocks (companies which are trading at a relatively attractive valuation), irrespective of the category that they belong to. Over the last couple of years, funds whose portfolio follow the value style have done well, whereas those preferring growth stocks have been hammered. In this category update, however, we have specifically emphasised on what the future holds for funds following a growth-style of investing. Rate hike freeze is good for growth The rise in interest rates is generally bad news for equities, something borne by the data provided below. Clearly, during phases of rising interest rates, Indian stock markets have had tepid to poor stock market performance over the last decade-and-half. But this current rate-hike cycle may be nearing its end. In the latest Monetary Policy Committee (MPC) meeting, the Reserve Bank of India governor indicated that the interest rates would remain unchanged in the near future, suggesting peaking
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