A worker closes the gates of the Bombay Stock Exchange at the end of trading in Mumbai on Monday. (AFP)

Mumbai, Jan. 21: The edginess is back — and retail investors who had scooted from the market after being scorched by the crash of 2001 must be starting to wonder if the dog days are back.

Fund managers and mutual fund experts, however, are seeking to soothe the jangling nerves of investors who shovelled money into the markets through mutual funds.

“Considering today’s market condition, the mutual fund investors are sure to feel scared. This will lead to a fall in sales of equity-oriented funds across the industry,” said Dhirendra Kumar, CEO at Value Research Online.

But Kumar believes that there is no reason to panic — at least not yet.

“There is no real reason to panic. Those who haven’t invested at all should wait for a while; those who want to invest for only three to six months should also stay away. Big investors should participate in a small way. If you were planning to invest Rs 1 crore for a short term, invest only Rs 25 lakh,” added Kumar.

Kumar reckoned that if the markets remained choppy, asset management companies would not come out with any new fund offers.

But the bigger worry for investors is whether their funds will flounder and yield piffling returns after two years of stunning gains. Considering the fall of 15.47 per cent in the last six sessions, returns of equity diversified funds could go down by at least 14 to 15 per cent, some pundits aver.

But that’s no reason to run.

“Till 2006, whenever the market recorded sharp falls, the investors used to stop investing in equity-oriented products. But we saw the trend change in 2007. We did not see any slowdown in equity investment by the retail investors when the market fell in February and August 2007. Investors should see this as an opportunity to enter the equity market and stay invested for a longer term,” said Sanjay Sinha, chief investment officer of SBI Mutual Fund.

“Volatility is always associated with the equity market. But that should not scare mutual fund investors. The economic growth story of India is still intact, and a compounded annual growth rate of about 20 per cent is still very much attainable. At our AMC, we do not expect to see our retail investors head for the door,” said Tridib Pathak, CIO (Equity) at Lotus India AMC Pvt Ltd.

“We currently have about 5 lakh mutual investors with JM Financial. In the last five years, we have noticed that the retail investors have allocated more assets to equity with every correction in the market. Although we expect another 4 to 5 per cent fall in the market in the coming days, the mutual fund investors are not likely to stop investing in our equity funds,” said Sandip Sabharwal, chief investment officer at JM Financial AMC Pvt. Ltd.