It is totally different. Then, we only had closed-ended equity funds with maturities between 5 and 15 years. The absence of liquidity and heavy discounts to ever-falling NAVs created panic among the investing public. This time round, open-ended funds ensured that liquidity as well discounts were not an issue and industry's efforts in educating investors ensured continuous inflows at least from a section of the investing public. My advice to investors would be that the best way to deal with daily or weekly fluctuations in the NAV is to remember the reason why you invested in growth schemes.
History suggests that a good quality portfolio always recovers.
A long-term approach by investors will enable them to reap benefits from the expertise of professional fund managers. Moreover, a disciplined approach of regular investing will allow them to weather stock market cycles. The tax incentives offered for investing in mutual funds in the 1999 Budget provided just the kind of impetus required to bring small investors back to the fold of the MF industry. However, the government's decision to increase the tax rate to 20 per cent on dividend as well as to delete provisions of 54 EA and 54 EB in 2000 have had an adverse impact on inflows into the debt funds. While the tax increase did not impact the growth option of a debt fund, the dividend option remained attractive only for individuals in the highest tax bracket as well as the wholesale segment.