Here are the dynamic funds that held up better in falling equity markets

When markets turn volatile, exposure to a few fund categories can offer downside protection, as past data demonstrate

 

• Year 2018 promises to be volatile for equity markets, with the US Fed promising three or even four rate hikes and the European Central Bank too reducing bond buying 
• These measures could reduce liquidity and cause volatility in equities 
• Past data show that among equity fund categories value funds tend not to fall steeply when markets are declining 
• Since they don't invest in high PE, momentum-oriented stocks, they tend to correct less
• Dividend yield funds invest in stocks that offer high dividends. The portfolio's dividend yield acts as a floor and stems its fall 
• Dynamic equity funds, which reduce exposure to equities as markets rise, are well placed when markets begin to fall  
• International funds offer diversification into foreign markets which don't always move in sync with Indian stock markets, and can therefore be a good hedge