Back in August 2008, Srikanth Matrubai had written a blog on why investors should not worry about the market fall. The blog recommended that investors to top up their SIPs in equity funds. In response, Matrubai got an email from a reader venting his frustration at the market crash.
Vinod (name changed), who wrote the email, was working in Hong Kong at the time. He vowed he would never invest in equity mutual funds again. Matrubai recalls, “We exchanged a lot of emails back then. In one such communication, I requested him to share his portfolio with me. I was shocked to see that he had exposure to several infrastructure funds. He suffered a loss of 35% in absolute terms during the 2008 market crash.”
Matrubai kept up his communication with Vinod through emails for the next two months. “I sent him a few portfolios of my existing clients to make him see the significance of asset allocation and rebalancing the portfolio. I had recommended my clients to shift some portion of their investment from equity funds to debt funds when the markets were heating up. Eventually, when the markets fell, the debt component gave a cushion to my clients’ portfolio. Later, these regular interactions made Vinod realise that ups and downs are part and parcel of equity investment and asset allocation is the key to achieve long term financial growth with safety,” said Matrubai.
On his next visit to India Vinod met Matrubai and requested him to manage his investments.
Matrubai then started rebuilding Vinod’s portfolio. “The first step I took was to exit all thematic funds. I recommended him to invest some portion in debt funds and do an STP in an equity diversified fund,” he said.
On probing, Matrubai found that Vinod wanted to settle in Australia. “Vinod had to accumulate at least Rs.6.50 crore to achieve this goal. I advised him to start an SIP of Rs.80,000 in equity funds to finance this goal,” he says.
Following Matrubai’s advice, Vinod started a few SIPs and kept increasing his SIP contribution every year.
After six years, Vinod’s portfolio grew to an extent that he bought a property in Australia. Matrubai’s sound advice helped Vinod get over his fear of equities and helped him achieve his goal.