Maintain exposure to US funds in face of recent underperformance

Your portfolio will benefit from geographical diversification

Over the past one year, actively managed US-focused funds have given a return of -6.3 per cent. In comparison, the Sensex has been flat. Despite the pain investors have experienced in the recent past, they should hold on to these funds.

 

What went wrong?
 

Low interest rates and high liquidity injected to cope with the Covid-19-induced slowdown provided tailwinds to the stock market in 2021. However, the scenario changed once inflation came to bite the economy and the US Federal Reserve (Fed) decided to raise interest rates.
 

“Persistent, sticky inflation, supply shortages, and Fed rate hikes