The first edition of the Morningstar Investment Conference was held on November 2 in Mumbai. With a star-studded line-up of speakers from Morningstar and outside holding forth on a wide range of topics related to investing, it turned out to be a spectacular success with over 400 attendees participating.
Morningstar Founder and CEO Joe Mansueto delivered the opening remarks. Having started the firm in 1984 in the United States, he spoke about the evolution of the mutual fund industry and also reminisced how Morningstar grew over the years to become the leading global voice in investment research it is today.
Madhu Kannan, the young and dynamic CEO of the Bombay Stock Exchange, delivered a keynote address on the mutual-fund industry, while also using the occasion to announce plans to launch an options contract for the BSE Nasdaq ETF, to allow investors gain exposure to the U.S. derivates market.
Morningstar India, which started operations in the country in 2008, also announced the launch of equity research. Read More...
In the line-up of events, first up was a presentation by Morningstar’s Director of ETF Research Paul Justice, who gave an introduction to the fledgling world of exchange-traded funds and how investors should use them while building their portfolios.
In a panel discussion on ETFs that followed, Ashu Suyash, India Country Head of Fidelity Investment, Nitin Rakesh, CEO, Motilal Oswal AMC and Sundeep Sikka, CEO of Reliance Capital AMC, dwelled upon whether ETFs will find as much success as in the west as a popular vehicle of investing.
The panelists agreed ETFs will take time to evolve in India and that it was too early to go into the debate of whether they will take the place of mutual funds and if they had any advantages over traditional funds.
Given the low penetration levels of equity investing in India, especially via means of mutual funds, ETFs will continue to grow alongside mutual funds, Suyash said. “It is too early in the day to talk about whether ETFs will replace mutual funds in a big way. Right now, the industry’s focus should be on helping create greater financial literacy in the country and growing the investment pie,” she added.
Dan Lefkovitz, Director of Operations, PEART, spoke about the hotly-debated issue of whether past returns for mutual funds, especially performance-based metrics such as Morningstar’s star ratings, had any power in predicting future returns.
Lefkovitz presented data that showed Morningstar’s five-star rated funds were seen to have outperformed one-star funds, especially after accounting for funds that dropped out, based on statistics gleaned from across regions such as U.S., Europe and India.
Morningstar’s Senior Research Analyst Vicky Mehta then hosted a panel that discussed what to look for while buying a mutual fund. The speakers outlined measures that mutual fund investors must keep in mind while selecting a fund.
The speakers emphasized on qualities mutual fund investors must look for while evaluating a mutual fund. The unanimous view was: apart from a fund’s past performance, investors must also look at factors such as the fund house’s reputation when it comes to issues of ethics, disclosure and transparency, experience of the manager and the fund’s willingness to abide by its mandate, among other things.
After the lunch break, a power-packed panel comprising Nilesh Shah, President – Corporate Banking, Axis Bank, S. Nagnath, President & CIO of DSP BlackRock Investment Managers, KN Sivasubramanium, CIO, Franklin Equity India and Morningstar’s Vice President of Global Equity and Credit Research Heather Brilliant then took center stage to discuss Indian stocks.
The panelists shared the view the view that while in the short term, the future for equities remained unclear but in the long run, stocks will deliver handsome returns. In the session moderated by Bloomberg UTV Editor Vivek Law, Shah, the former star fund manager, said that while it may be difficult for stocks to deliver the lofty returns of the past few decades, intelligent bottoms-up stock picking along with patience to stay in for the long haul would work well for Indian stock investors.
Dhruva Chatterjee, Senior Research Analyst, Morningstar India, then hosted a discussion about fixed-income opportunities in the country and ways with which investors can seek greater returns from their debt portfolios.
Finally, Deutsche Bank’s Ajay Bagga, Karan Bhagat of IIFL Wealth Management and Dr Vikram Kuriyan from the International School of Business came together to discuss investing in alternate asset classes such as gold and real estate.