Anoop Bhaskar, Prashant Jain and Sankaran Naren share some advice for advisers. All three were panelists on the 'Stock Market in 2017: How Are Your Portfolios Positioned?' panel at the Morningstar Investment Conference.
Kaustubh Belapurkar, Director of Fund Research for Morningstar India, posed this question: What must advisers keep in mind when talking to investors with regards to investing in the years ahead?
I'll give you one statistical point.
There is one range of return which the market never gives and that's 10% to 15% every year. That is the only range which has never been achieved in any year on the Sensex. Either the market gives a return of 8% or lower or 15% or higher. So, be aware of this when you project a return.
So then you can choose based on your mood, whether it's going to be 8% or below or 15% or above. I'll stop at that.
And because IDFC Mutual Fund does not have a balanced fund in its portfolio, please wait for that to come out to put money into and to actually allocate in that category. Otherwise, we are there in almost all other categories.
- Anoop Bhaskar, Head of Equities, IDFC AMC
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I think I have been in market for 25 years and every year people have tried to guess the index over the one year and there have been risks in each of these years.
But I think the really smart investors have been simply patient. There are a whole lot of funds in India which have delivered 15% to 20% CAGR over 20 or 25 years.
I think it's a great asset class and I think the economy is looking extremely well-poised to my mind. Index has done nothing for eight years. I mean, the index levels in 2008 and today are not too different. So, I think if we are simply patient and for the next 3 to 5 years, it should turn out to be quite good.
- Prashant Jain, Executive Director and Chief Investment Officer, HDFC AMC
Prashant Jain: When to sell an underperforming fund
Going from the people I met over the last few months, I see a lot of interest in mutual funds. A lot of fixed deposit investors are coming into mutual funds. And in my opinion it's the responsibility of the advisory community to ensure that they don't move fixed deposit customers to the highest-risk product and they educate the customer about the risk of the product that they are investing in.
So, if you look at it, debt has clearly lower risk than equities. Income again has lower risk compared to balanced funds. So, I think, it is very necessary for advisers to advise the customers according to the risk.
And because interest rates on fixed deposits three years back was close to double-digits and now it is around 7%, I see a lot of people wanting to invest in mutual funds. And it is the responsibility of the advisory community to choose the right product because the day they choose the right product, I'm reasonably convinced that the investor will stay with the mutual fund industry over the next 5 or 10 or 15 years. If they come into the wrong product, then I think in the next big correction the customer will say I made a mistake coming out of a very safe product into the mutual fund industry.
The mutual fund industry has very safe products and products which give you high return at high risk. And it is the responsibility of the advisory community to choose the right product based on the risk profile of the individual. It was not a problem earlier, because when interest rates are 10%, people say, if someone wants safety, they go to the banks.
- Sankaran Naren, Executive Director and Chief Investment Officer, ICICI Prudential AMC
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