Impact of Fear During Indo-Pak War

Why Staying Invested Matters

Discover how fear-driven investment decisions during the Indo-Pak war led investors to miss out on significant mutual fund gains. Learn why long-term thinking is crucial for wealth creation.

Introduction

Financial markets are often driven more by emotion than logic. The recent data during the Indo-Pak war period is a stark reminder of how fear can cloud judgment and lead to hasty investment decisions. For investors who panicked and redeemed their investments between May 9 and May 26, the cost was high—missed gains across major mutual fund schemes.

In this article, we explore the performance of various mutual fund schemes during this volatile period and highlight the importance of staying invested during uncertain times.

Mutual Fund Performance During the Indo-Pak War (May 9–26)

💼 Mutual Fund Category Performance Table

Key Insights

1. Fear Led to Premature Redemptions Investors reacting emotionally to geopolitical tensions ended up redeeming their investments just before the market rebound. This behavior underscores the detrimental effect of fear in investment decisions.
2. Strong Recovery in Just 15 Days Every scheme listed saw positive NAV growth, ranging from 2.87% (BAF) to a striking 6.11% (Energy Opportunity). Those who remained invested benefited from this quick turnaround.
3. Diversified Funds Delivered Well Schemes like Contra and Large & Mid Cap, which carry diversified exposure, showed healthy returns, reaffirming the advantage of diversification during volatile periods.

The Power of Staying Invested

Short-term noise vs long-term goals:

Geopolitical events, market corrections, and global uncertainties are part and parcel of investing. But over time, markets have consistently rewarded patience and discipline.

Avoid timing the market:

Even experienced investors struggle to time entry and exit points perfectly. Staying invested ensures you’re part of the recovery and the long-term compounding effect.

Historical Evidence:

From past financial crises to wars and pandemics, markets have always rebounded stronger. Investors who held on emerged with significantly higher returns compared to those who exited in panic.

Conclusion: Think Long-Term, Stay Invested

The Indo-Pak war scenario is yet another lesson for investors: emotional decisions often come at a cost. Mutual fund investors who stayed the course from May 9 to May 26 saw gains up to 6.11%—a powerful return in just 15 days.

Moral of the story: Stay invested, ignore short-term noise, and let your money grow over time.

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