10 Mutual Funds That Dropped 20-22% in 6 Months – Should You Buy or Avoid?

Investing in equity mutual funds is risky, with recent market trends being significantly revised in several funds. Over the past six months, certain stock mutual funds have fallen between 20% and 22%, with investors wondering whether they should buy, hold or avoid them. In this article, we will analyze the top 10 mutual funds have fallen from 20% to 22% in the last six monthscategorize them based on investment strategies and provide insight into whether they present good investment opportunities.

What has happened to the Indian stock market over the past six months?

You may wonder why this article explains mutual fund performance over the past six months. The Indian market is being revised in LAT in 4-5 months. We observed that there were over 10 equity funds (ETFs) over 20% during this period. Some investors may think this is a good opportunity to make the right investment in such a market. However, investors should always analyze Thoruglly. The worst performance mutual fund of the past three years I explained it in a previous article.

A list of 10 mutual funds that fell 20-22% over six months

The table below shows the most sharply declining mutual funds in the past six months.

Breakdown by category of these declining mutual funds

Analyze each category, understand why they fell, and determine if it’s worth investing right now.

#1 – Index Funds – High risk, high reward?

Bandhan Nifty Alpha 50 Index Fund (-22.88%)

The fund tracks the Nifty Alpha 50 index, consisting of stocks with high alpha (excessive returns compared to the market). It can produce high returns during the bull run, but if the market is correct, there will also be a sharp decline.

#2 – Infrastructure Mutual Funds – Impact of the Market Cycle

Tata Infrastructure Fund (-22.66%) & Bandhan Infrastructure Fund (-20.59%)

Infrastructure funds focus on companies engaged in construction, electricity, roads and utilities. These sectors are heavily influenced by government policies, economic conditions and availability of funding.

• Reasons for decline:
  • High interest rates affecting infrastructure projects.
  • Reducing government spending due to financial constraints.
• Should I invest?
  • Only long-term investors who believe in the growth of India’s infrastructure.
  • High short-term volatility.

#3 – Defense Mutual Fund – Is the hype cooled?

Motilal Oswal Nifty India Defense Index Fund (-22.64%) & HDFC Defense Fund (-20.18%)

Defence sector funding was one of the most hyped categories of 2023, dependent on rising defense budgets and increased independence in defense manufacturing.

• Reasons for decline:
  • Concerns of overestimation after a sharp meeting.
  • Sector-specific revisions through profit reservations.
• Should I invest?
  • The sector is unstable and therefore has high risk.
  • Those who missed the first meeting can consider SIP instead of temporary investment.
  • Conservative investors should avoid it.

#4 – Special Opportunity Fund – Not for All

Samco Special Opportunities Fund (-22.46%)

The fund aims to invest in unique and underrated opportunities that are risky and unpredictable.

• Should I invest?
  • It’s not ideal for risk aversion investors.
  • Only those who understand the market cycle and can handle sharp fluctuations.

#5 – PSU Mutual Fund – Government-supported but unstable

Quant PSU Fund (-22.03%), Kotak BSE PSU Index Fund (-21.35%), and Invesco India PSU Equity Fund (-20.26%)

Public Sector Business (PSU) funds focus on government-owned companies in sectors such as banking, energy and defense.

• Reasons for decline:
  • PSU stocks are extremely unstable and rely on government policies.
  • Profit booking after a strong 2023 meeting.
• Should I invest?
  • Only if you believe in the long-term potential of PSU.
  • Prepare for a sudden economic recession with government intervention.

#6 – Energy Mutual Funds – Difficult to Predict Sectors

SBI Energy Opportunity Fund (-21.19%)

The fund focuses on companies in the energy sector, including oil, gas and renewable energy companies.

• Reasons for decline:
  • Global crude oil prices fluctuate.
  • Uncertainty about renewable energy policies.
• Should I invest?
  • Suitable for investors with long-term horizons.
  • It is extremely cyclical and dangerous for short-term investors.

#7 – Flexica Cap Fund – Unstable in the current market situation

Samco Flexi Cap Fund (-20.45%)

Flexi Cap Funds offers the flexibility to invest in large, medium and small caps.

• Reasons for decline:
  • Intermediate and small caps have performed poorly over the past few months.
  • The fund manager’s stock picking strategy may not be working well in current market conditions.
  • When analysing the performance of Flexi Cap Mutual Funds over the past six months, most people have provided returns in the range +5% to -20%this fund is the worst performer. Investors can check Top 7 Flexica mutual funds that have been transformed into one lark in the last five years.
• Should I invest?
  • Investors should monitor the fund’s future performance before making a decision.
  • If you prefer stability, consider large diversified funding.

Should I invest in these beaten mutual funds?

• Investors should be cautious before jumping into these funds just because these funds fell sharply.
• Infrastructure, PSUs and energy funds could recover in the long term, but remain volatile.
• The Defense Fund was previously promoted and is now cooled. Their future recovery is uncertain.
• Flexi Cap and special opportunity funding must prove resilience before becoming a strong investment choice.
• For long-term investors with high risk, bite This may be a better way to get into these funds rather than temporary investments.

Always analyze risk appetite, investment tenure and financial goals before making investment decisions.

What do you think? Have you invested in any of these mutual funds? Are you planning to invest in them now? Let us know what you think in the comments below!

Suresh KP is a veteran financial expert with over 20 years of experience. He is a NISM certified investment advisor and research analyst. For more information about his expertise and certification, please visit Suresh KP

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