Srinagar, May 5 -- Mutual funds, by design, offer a buffer against individual stock volatility. Equity funds, for instance, typically invest in 50 to 60 companies across sectors. This diversification softens the blow of underperformance by any single company. When the broader market dips, such funds may still hold strong through balanced exposure.

Yet the real challenge lies in resisting emotional decisions. In volatile phases, investors often panic, redeem their investments at a loss, and miss the recovery that usually follows. Behavioural studies suggest that fear and overconfidence are the biggest threats to returns, not the market itself. Holding on during tough times, therefore, becomes key.

Fund managers, who oversee mutual fund p...