Over 7500 investors gained useful insights on the future of investing on the second day of the Cafemutual Confluence 2020 Investment Marathon.
As many as, 9 speakers addressed the audience members on topics that will help them become smarter investors. Among the topics that were discussed in detail were the mantras to become a better investor, dealing with volatility, spreading risk, future of debt funds and impact of behaviour on returns.
Here are the key highlights of Day 2.
Kailash Kulkarni, CEO, L&T MF
Topic - How to be a better investor
Consult a financial advisor to ensure proper asset allocation and plan investments depending on your financial situation, risk profile, goals and investment horizon. Even after spending so many years in the industry, I have a financial advisor to ensure I am on the right track
For the next 5 years in India, active funds are likely to beat passive funds. Yet to diversify, you can allocate around 15% of your portfolio to passive funds. After 5-7 years, depending on the market dynamics you can increase allocation to passive funds to around 25%
Bharat Ravuri, MD, Principal MF
Topic - Dealing with Volatility
Ensuring right asset allocation is key to deal with volatility as each year some asset classes emerge as the winner while some witness sharp corrections. Therefore, it is important to have the right mix.
Finally, stay invested as it is a proven fact that chances of negative return diminishes with time. Look for an advisor as a good advisor helps you strategize your investment journey, ensures proper asset allocation and handholds you during volatile times.
Sankaran Naren, ED & CIO, ICICI Pru MF
Topic - Spreading your risk
Asset class winners change every year. Therefore, the solution is asset allocation. Adopting and following a prudent asset allocation strategy based on investor’s goals, investment horizon and risk tolerance is key to successful long term wealth creation. Asset allocation provides the twin benefit of managing cyclicality of asset classes and managing investor behaviour.
For diversification among equity, debt and gold, invest in dynamic asset allocation schemes or hybrid category schemes. For diversification across debt strategies, use dynamic duration schemes. For diversification across geographies, themes, sectors, market caps and asset classes, park money in fund of funds (FOFs)
Niraj Shah, Editor - Markets, Bloomberg Quint
Topic - Common behavioural biases and how to overcome them
A common behavioural bias is narrative fallacy bias. Because of this, investors gravitate towards investment opportunities even if they are overvalued
Another common behavioural bias is compulsive anti-herd bias. This prompts investors to not invest in good opportunities just because most investors are opting for it. As a result, investors miss the best bullish rallies in the market. To overcome them, take note of it and keep referring to it
Anoop Bhaskar, Head- Equities, IDFC MF
Topic - What I should have learnt in 30 years from the markets
You can have multibaggers in your portfolio only if you wait for a long period. I exited many stocks after earning considerable returns from them. But later these stocks went on to become not only multibaggers but among the top companies of India as well
If you do not get a set of investment calls right, it is important to move on. On luck, I feel it is very important but as Michael Jordan says you give yourself more chances to be lucky if you practice more and stay in the game for a long period
Nimesh Chandan, Head - Investment, Equities, Canara Robeco MF
Topic - Investor behaviour and its impact on returns
To avoid the negative impact of behavioural biases on your investments, stay focused on the long term and avoid short-term noise. Another thing that you can do is stay patient. Rahul Dravid faced more than 31000 balls in his Test career and 23000 of them were dot balls. Yet he managed to score over 13000 runs at an average of 52. The lesson is stay patient and cash in when you see a good opportunity
Another lesson is research and prepare well. One more thing that investors can do is to make a plan and pre-commit. This is why SIPs work
Amandeep Chopra, Group President & Head -Fixed Income, UTI MF
Topic - What now for debt funds?
Credit risk strategy is unlikely to work in the near-term as long as the Indian economy is not on strong footing. Therefore, it is better to invest in high quality debt instruments. Do not opt for a fund just by looking at the past returns or yield to maturity (YTM) which is the total return anticipated on a bond if the bond is held until it matures
If you are looking to invest for less than 1-year, opt for money market funds and low duration funds. If your investment horizon is 1-3 years, opt for corporate bond funds. If the investment horizon is more than 3 years, you can look at gilt funds and dynamic funds.
Vinay Paharia, CIO, Union MF
Topic - Navigating a tricky stock market
Markets corrected sharply because investors were uncertain about the consequences of the pandemic. But investors have some idea about the impact of this pandemic and this has resulted in a sharp recovery
I would say even today, this is a good time to invest in equity funds in lump sum. If you have good risk appetite and have an investment horizon of 10 years, small cap funds will be a good bet at this point
Dhirendra Kumar, Founder, Value Research
Topic - Your MF queries answered!
You need not watch your investments and fluctuation in the NAV daily
Ideally, you should review your portfolio on an annual basis
If you want to replace your actively managed equity fund with an index fund, you should do it only for a large cap fund at this point. Mid cap, small cap and multicap still present a lot of opportunities.
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