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What should you do with your investments in Axis Mutual Fund?

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Mutual fund investors are a bit worried about the allegations of frontrunning by two fund managers in Axis Mutual Fund. The fund house said it had suspended two employees and it is investigating the matter. Mutual fund circles and social media are full of speculation about the extent of damage the development can do to investors and the industry. If you have investments in Axis Mutual Fund, let us examine the details.

We don’t have much information to make a well informed decision. All we know is that two employees were suspended and they were allegedly using privileged information to make money. They may have bought shares before the fund bought the shares. But did investors lose money because of their actions? If yes, how much? We still don’t have answers to these questions.

According to investment experts, such buying is unlikely to make a big difference to the share prices of top companies as there are enough shares floating around in the market. That means if you have invested in a scheme that has investments in large companies, you may be safe. However, that’s not the case with some mid and small cap stocks. Large purchases can make a big difference to prices of these stocks. That means you should closely watch your schemes with large investments in mid and small stocks.

Should you sell your investments? Most investment experts believe the best course of action could be to wait for a clear picture. They believe that the fund house may come up with more information. We may also hear from Sebi. So, at the moment you don’t have to rush to sell your investments.

However, when it comes to your future investments, the opinion is divided. Most advisors believe that investors can hold back their investments till there is clarity. Only a small number of advisors believe that investors should go ahead with their investments. They believe that in-house checks and balances would ensure that the money is not safe.