InvestorQ : What is a ‘Hindu Growth rate’ and can it help to earn decent returns on mutual funds?
Ayushi Kampani made post

What is a ‘Hindu Growth rate’ and can it help to earn decent returns on mutual funds?

Answer
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sara Kunju answered.
4 months ago


If you look at the present the scenario there are high indications that India is moving towards a Hindu Growth Rate. It is the rate that is clocked by the Indian Economy during the time it followed protectionism, it witnessed a long-term average growth rate of about 3-3.5% back then.

For now, RBI has not disclosed the forecast for real GDP growth in India. However, it has presented a possible impact of the global slowdown on India’s growth and inflation using Quarterly Projection Method (QPM) under alternative scenarios.
Scenario 1 assumes that the growth rate in 2020 will be about 3 points lower than that in 2019. Whereas, Scenario 2 assumes that the loss of global output growth is only 1.5 percentages as compared to 2019.

There are chances that corporate earnings across sectors would be affected severely in the next 2-3 quarters and will definitely show its impact on the equity markets and mutual fund performance. This means that the mutual funds would generate comparatively lower returns in the next few quarters. However, that is not going to last for a substantially long-time but long enough to test the patience of investors.

If you have an investment in funds that have generally outperformed or met its benchmark, you definitely need not worry as you have invested in a health plan and that would rise again as soon as the market gets back on its feet. However, if you still have doubts about the performance of your fund, you should check the past performance and future projections of your fund immediately to take the right decision. This is the right time to deploy in funds, for a long term horizon, that has performed well in the past as they are likely to generate wealth whenever the market moves upward.