Mutual Funds invest in businesses (equity funds: stocks) or lend to businesses (debt funds: bonds). So they are exposed to two cycles.
- Business cycles: Most businesses respond to demand and grow in spurts, build capacity and make profits. Their stock prices move accordingly.
- Interest rate cycles: The above is also impacted by macro economic trends that are cyclical. This is a complex topic but suffice too say that internet rate movements, exchange rates and various factors impact returns.
We have seen a fairly long bull market run and hence returns are getting tempered now. This is natural and nothing to worry about.
Stay invested; if invested in mutual funds, switch to direct plan mutual funds that entail zero commission (you earn 40% more in the long run).
