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Mahesh Kumar
Investor/ Part Time Trader
Asked a question 4 months ago

Do mutual funds and SIPs get impacted due to market correction?

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Hi Mahesh,

Mutual fund and SIP's do get impacted due to market correction. However Mutual funds or SIP's invest in a fixed number of stocks. So basically it depends on the type of fund you have invested. For example - Large cap show fall less than small cap in a correction phase. 

Thank you, 


Yes. These get affected as these are directly linked to the stock market. Mutual funds is not an alternative investment option, rather these are a one of the method of investing in the stock market.

Not sure. But i think it may

Yes, it does get affected if you have INVESTED in Equity linked mutual fund.

Equity mutual funds are directly related to the market as money is invested in stocks.


If you have invested in liquid or debt funds, then there will not be much correction because market fluctuations don't affect it.

Anything related to the market gets impacts the market movements. Whether direct Equity, MFs, Debt MFs, Bonds, etc. Equity is affected by two kinds of market movements:

1) Systematic Risk - this is a macro event. Examples - are war, Covid, oil shortages, etc.

2) Unsystematic Risk - this is specific to a stock or industry. Examples - poor results posted by a company, fall in steel demand, etc.

Yes, mutual funds and SIPs can be impacted by market corrections. 

However, the extent to which a mutual fund or SIP is impacted by a market correction will depend on a number of factors, including the composition of the fund's portfolio, the fund manager's investment strategy, and the overall market conditions. For example, a mutual fund that invests primarily in defensive stocks or that follows a value-based investment strategy may be less impacted by a market correction than a fund that invests primarily in growth stocks or that follows a momentum-based investment strategy.

It is important to keep in mind that mutual funds and SIPs are long-term investment products, and investors should not be overly concerned with short-term fluctuations in the market. In fact, some investors may view market corrections as an opportunity to buy quality stocks or mutual funds at a discount. However, investors should always do their due diligence and consult with a financial advisor before making any investment decisions.