Managing market volatility: How active management works in equity mutual funds and SIP

Managing market volatility: How active management works in equity mutual funds and SIP

Investing in the stock market can feel like riding a rollercoaster. Prices go up and down, sometimes without warning. This is called market volatility, and it can make investors nervous. But there's a way to navigate these ups and downs: through active management in equity mutual funds and SIPs.

Let's break it down:

What is market volatility?

Market volatility is like the weather-it changes all the time. Sometimes, stock prices go up a lot, and other times they drop suddenly. It's normal, but it can be scary for investors. Market volatility happens because of many reasons, like economic changes, political events, or even unexpected news.

What are equity mutual funds and SIPs?

Equity mutual funds and Systematic Investment Plans (SIPs) are ways to invest in the stock market without picking individual stocks yourself. When you invest in SIP in these funds, your money gets pooled together with money from other investors. Then, professional fund managers use this money to buy a bunch of different stocks. This is called diversification, and it helps spread out the risk.

Active Management: Riding the Waves In the world of investing, there are two main strategies: active management and passive management. Active management means the fund managers are actively buying and selling stocks to try to beat the market. They do a lot of research and keep an eye on what's happening in the world to make appropriate decisions. When the market gets rough, active managers might adjust their investments to try to mitigate impact on capital.

Benefits of Active Management

One big benefit of active management is that it can provide cushion to your capital during turbulent times. Since active managers are always watching the market, they can make quick decisions to try to limit losses. They might also spot opportunities to buy stocks when they're cheap, which could lead to higher return potential in the long run.

SIPs: SIP stands for Systematic Investment Plan. It's like setting up a regular savings plan for investing. Instead of putting a lumpsum of money into the market all at once, you invest a small amount of money regularly, like every month. This can help smoothen the impact of market volatility. When prices are high, you buy fewer shares, and when prices are low, you buy more shares. Over time, this strategy can help you benefit from something called ‘rupee-cost averaging,’ which means you buy more shares when prices are low and fewer shares when prices are high. You can also make use of SIP calculators, compound interest calculators to create a robust investment strategy to meet your financial goals.


Managing market volatility is a key part of successful investing. Through active management in equity mutual funds and SIPs, investors can navigate the ups and downs of the stock market with more confidence. By relying on skilled fund managers to make appropriate decisions and using strategies like SIPs to smooth out the bumps, investors can work towards their financial goals while weathering the storms of market volatility. Remember, investing always carries some risk, but with suitable strategies in place, you can set sail towards a brighter financial future.

About Bajaj Finserv Asset Management Ltd.

Bajaj Finserv Asset Management Limited, a wholly-owned subsidiary of Bajaj Finserv Limited, has entered the investment solutions industry. Backed by one of India’s most respected and oldest brands, it offers a host of innovative products and solutions to every Indian. With a future-focused and differentiated investment strategy, its ambition is to help every Indian achieve his/her financial goals.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.