Mutual Fund: It’s the right time to invest in markets
When compared to April and May of this year, equity markets have made a comeback now. Investors who exited the market in March want to return as markets have gone up, and the best route to make returns is via the Systematic Investment Plan (SIP).
On the latest episode of Mutual Fund Mantras (hosted as a part of HT Friday Finance) titled, ‘Strategies to invest when markets are at life-time high’, Monika Halan, Consulting Editor, Mint, discussed about markets, High Net worth Individuals (HNIs) investments and budget expectations with two experts - A Balasubramanian, MD and CEO of Aditya Birla Sun Life AMC Limited and Dr Harsh Purohit, Professor of Finance and Dean, FMS-WISDOM, Banasthali Vidyapith.
Experts highlighted the present market, which has hit an all-time high, and how investors can make use of mutual funds to get higher returns.
Moderator Monika Halan said there are investors who exited the market when markets dropped in March and they have been holding onto the money waiting to come in. When she asked what investors should do and how they should behave now, Balasubramanian said the common thread between now and then is staying invested.
“When investment is meant for long term, there will be ups and downs, but at the end of the day, fundamental catches up. Policy makers will start working on to uplift the economy and such initiatives will bring back normalcy in the market. Equity as an asset class goes through pull period after fall. Generally, the pull back sustains for 1.5 -2 year period. Therefore, new investors have to focus on asset allocation,” Balasubramanian said.
He added, “If you look at the whole investable opportunities whether it is in Fixed Deposit, real estate or in equity, in India, interest rates are the lowest. Though deposit provides a guarantee on returns and has a safety element, it gives a lower interest rate. Investors have to build conviction that investing in equities give better returns and focus on asset allocation. SIP is the mantra and one should focus on SIP as the way of investing.”
Talking about HNIs, Balasubramanian said from the investment point of view, whichever scheme suits them, they should look beyond 2021 and 2022.
When the moderator asked what should investors look forward to? Dr Purohit said every investor must know that whatever investments they are doing; it should align with the personal financial goal.
“Somebody who is sitting on the cash should immediately come back and start investing, maybe through the SIP. The amount can be invested as soon possible. People have got lot of confusion where to invest and what is the right way to diversify, sometimes there are too many people, prediction and noises, but now thankfully the mutual fund industry has matured and it is a big industry,” said Purohit.
He said people should stay invested for a longer term and that it is always better to choose the right scheme. “One should have expertise and wisdom and that the prediction and real picture would have a gap. If you talk about retail investors, they might not take the right decision. It is better to do investment through good MF schemes,” he added.
Market has bounced back
Balasubramanian said that the market has bounced back in the last 6 months and it comes on the back of regulators reacting to the new normal and they took all the steps that would help in keeping the sentiments high.
“Secondly, as and when the market picks up, economy picks up and we have the right policy in place, whether it is respect to Forex or push from the government in the form of stimulus. Initially in April and May, most companies did react negatively, not knowing their own business model. July was considered pent-up demand and nobody was expecting August to be better than July,” he said.
Balasubramanian spoke about the sales of four-wheeler, two-wheeler and Commercial Vehicles (CVs). In October, CV sales were better than previous months.
“The way the policies are in place and continuous reforms from the government for various initiatives, it seems normal growth will come back as we move in 2021-22. The growth expectation for India in 2022 is gaining momentum be it Reserve Bank of India’s (RBI) projection or even global projection,” Balasubramanian added.
Talking about the Budget expectation, Purohit said, “We remain hopeful that with the recent RBI policy and the documents that we have seen, we hope the budget will be really bright for the economy. If we look at April or May 2020, then now- November and December 2020, these months are definitely better. We are quite hopeful and we are also seeing more maturity in the market.”
Watch the full video: