Published: 20th April 2020
IIT-H faculty analyses impact of COVID-19 pandemic on the performance of IMF industry
The Research has taken into consideration the period between January 30 to March 15 as COVID-19 low-intensity phase and from March 16 to April 15 as COVID-19 high-intensity phase
Indian Institute of Technology (IIT) Hyderabad faculty Prof Badri Narayan Rath has analysed the impact of COVID-19 pandemic on the performance of the Indian Mutual Fund (IMF) Industry.
Mutual Funds have become the investment vehicle for propelling wealth and widening the choice of India's middle class.
However, the current catastrophe amidst Coronavirus-induced nation-wide lockdown has created havoc for both Mutual Fund investors and the Mutual Fund Industry.
The aim of this research is to explore the linkage between COVID-19 and financial performance of the Mutual Fund Industry and conclude with a few insights, a statement here said on Monday.
Speaking about his analysis, Prof Rath, Department of Liberal Arts, IIT Hyderabad, said, "Investors with a continuous flow of income who are aiming at long-term investment horizons should not pull out their money from mutual funds irrespective of volatility in the equity and debt funds in the short term. Instead, the small investors may shift from the Systematic Investment Plan (SIP) to the Systematic Transfer Plan (STP) in the medium term to mitigate the risk amid the COVID-19 outbreak." As on April 19, 2020, there are nearly 2.2 million confirmed cases and 152,707 deaths due to COVID-19 worldwide, according to the World Health Organisation. India being the second populous country is no exception from this pandemic.
The decision of complete lockdown taken by Prime Minister Narendra Modi in discussion with all stakeholders inappropriate time has significantly changed the narration as compared to many advanced nations, the statement said.
The total number of COVID-19 cases in India has crossed slightly above 17,000 with over 500 deaths, however, the emergence of Coronavirus disease has already dampened Indian economy and it's too early to predict the exact magnitude of economic loss, It said. India officially announced its first COVID-19 positive case on January 30 and a total number of cases were less than 100 till March 15 and thereafter the new cases have been increasing until April 15.
The Research has taken into consideration the period between January 30 to March 15 as COVID-19 low-intensity phase and from March 16 to April 15 as COVID-19 high-intensity phase and compares the performance of the Mutual Fund industry. Although the new COVID-19 cases keep snowballing, it is worthwhile to notice that the growth rate of COVID-19 confirmed cases shows a steady path particularly after April 5.
It clearly demonstrates that the lockdown decision taken by both Central and State Governments has so far controlled this pandemic as compared to many western countries, the statement added.