Markets are in turbulent times and one needs to carefully invest in mutual funds. Dhirendra Kumar, CEO, Value Researchonline, feels that there is nothing new about people investing at the top. "Investors invest very confidently when the market is at its peak - that can be said for all bull markets whether 1984 or 2000 and now. So there is a lesson to be learnt from here."

According to Kumar, the first and foremost thing for first-time or naive investors is to invest money for long-term, learn from their lessons and invest regularly.

Speaking to CNBC-TV18 Dhirendra Kumar said, if one has stopped investing, maybe it is about time that one should get started with regular investing. "Make sure that you have chosen a good fund, do not buy the popular fund again because most investors chase past performance." Everybody is in the business of chasing momentum; that could be risky, he said.

Excerpts from CNBC-TV18's exclusive interview with Dhirendra Kumar:

Q: There has been a very dramatic erosion in net asset values. If you were to sum up the last six months, how would you look at the mutual fund industry and what does it look like from here in terms of sector funds and equity diversified funds because looking at these returns and they are in excess of the kind of fall that we have seen on the market?

A: There are a lot of outliers in the whole thing. The averages do not reveal the whole truth. If we dissect the numbers intensely and then we look at things, we get a completely different picture. The popular fund, the larger fund have not lost as much but the biggest loser over the past six months has lost 54%, which is nearly 1.5 times more than the Sensex. So in that sense we come across a large number of fund, which did not have any risk containment thing factored into their portfolio. They have been on a free fall and my worry is that we are getting into a phase where a number of these funds will be exposed to the risk that a good part of their portfolio will be illiquid.

Q: That means trading or churning the portfolio would not be as easy.

A: It will be impossible for them to churn the portfolio of the remaining-that is the other side of the bear market that markets decline and initially the redemption pressure drives you to sell what you can sell easily and then the leftover is completely unsellable. So the bad gets worse in a bear market and that is what some of these funds which are at the bottom of the heap will be faced with.

Q: The fact remains that people who had invested right at the top of the market-which is at 21,000 point-have seen a lot of erosion in their net asset values, what do you think about it?

A: There is nothing new about it and investors invest very confidently when the market is at its peak that can be said for all bull markets whether 1984 or 2000 and now. So there is a lesson to be learnt from here. First and foremost you should invest your long-term money for a naive first time investor and learn from your lesson and invest regularly; this is a lesson to be learnt. If you have stopped investing maybe it is about time that you get started with regular investing. Make sure that you have chosen a good fund, do not buy the popular fund again because most investors chase past performance. Everybody is in the business of chasing momentum that could be risky. 

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