What are the best funds to invest in during COVID?

If the COVID-19 induced economic crisis is giving you night terrors then you aren’t the only one. The COVID lock downs have created a difficult situation worldwide wherein the best thing you can do is stay back home and not do anything. This stagnancy has seeped into the global markets too where the situation has become extremely volatile, with regular market corrections.

Lately, the Indian markets have seen high redemption and low cash inflows especially on the debt front. Investors are so terrified of the fall and rise in the market that they are not investing in equities, withdrawing their money from debt and stopping SIPs. Panic ridden investors are making irrational, impulsive decisions. As per industry experts, this time is as perfect as it could be, to invest in certain asset classes. These asset classes are as follows:

  1. Equity Funds
  2. Liquid Funds
  3. Gold Funds

Let’s get into the details of why each of these asset classes is a good option to invest in right now. Here’s a list of the best funds to invest in during COVID :

Why should you invest in Equity funds?

The first investment option you should consider during this global crisis is Equity. This asset class is great because the prices of equity funds are quite low currently, in fact they are lower than they have ever been in years. You should look at it as a great opportunity to buy more units at lesser prices. 

The idea is to buy at low and sell at high, when the prices of funds are restored in the future. The rule of thumb when investing is to be consistent. While the ship may be stuck in the middle of the storm right now, it will soon be parked safely in the harbor. Our point being, historically bad market times always give way to good times. So, patiently invest in equities right now and sit back to be handsomely rewarded later when market prices for these funds bloom. Here’s a list of our top 5 Equity funds that you should be investing in during COVID struck times:

  1. SBI Magnum Equity Fund
  2. Axis MultiCap Fund
  3. IDFC Multicap Fund
  4. Kotak Standard Multicap Fund
  5. Parag Parikh Long Term Equity Fund

Invest in Equity Funds

Buy equity funds at their lowest prices in years

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Why should you invest in Liquid funds? 

Liquid funds are also an important part of the list of the best funds to invest in during COVID. In fact, industry experts say that it is a good idea to park you emergency fund money into liquid funds because some of them offer instant redemption. Another key reason to invest in liquid funds is their prices are mostly unaltered during stressful times. This means that even during COVID times, they are a good space to invest in. 

They invest in highly liquid and very short term papers which means lower volatility and risk. In addition to all this, they offer high returns during high inflation phases as well. Perfect pick, right? Here are our top 5 picks for liquid funds schemes you should totally invest in right now:

  1. IDFC cash fund
  2. Axis Liquid Fund
  3. ICICI Prudential Liquid Fund
  4. SBI Liquid Fund
  5. Kotak Liquid Fund

Invest in Liquid Funds

Liquid funds are a great tool to beat market volatility

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Why should you invest in Gold funds? 

Do you want to keep your portfolio unaffected by the market turmoils? Well, here’s the way to insure your portfolio. Gold funds are a fantastic tool to keep balance in your portfolio. There is a reason why all asset allocation plans ask investors to invest at least 5-10% of their money in gold funds. This asset class unsurprisingly has a negative correlation with other famous asset classes, especially equities. When equities fall, historical data shows that the value of gold funds rises. There could be many explanations to that.

Firstly, when people’s faith in the market falls they start accumulating gold. It also works as a hedge against inflation as it’s value always rises over the long term just like inflation rates. People think of gold as a safe instrument and for good reason. You can read more about gold funds and their benefits during difficult times here. Our top 5 gold mutual funds pick are:

  1. ICICI Prudential Regular Gold Savings Fund
  2. Nippon Gold Savings Fund
  3. SBI Gold Fund
  4. Kotak Gold Fund
  5. Axis Gold Fund

Invest in Gold Funds

Gold funds protect your portfolio against market volatility

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Bonus Tip: It will be a good idea to invest your money in an SIP as well. Just look at it like this – you can buy more units with the same amount of money presently and get rewarded later handsomely when the markets are soaring. So, grab all the equities you can, right now.

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This concludes the list of Sqrrl’s picks for the best funds to invest in during COVID.

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