On Day 3 of Cafemutual Confluence 2020 Investment Marathon, as many as 10 speakers addressed 8573 investors and provided them useful insights to get better at investing.
The curtain has come down today on an insightful and exciting Cafemutual Confluence 2020 Investment Marathon. On Day 3, as many as 10 speakers addressed over 8500 investors on some of the most pertinent topics of the investment world at this point and provided them useful insights to become a better investor.
Among the topics that were discussed in detail included important rules of managing money, happiness and money, recent trends in the equity market and building debt fund portfolios etc.
Monika Halan, Consulting Editor, Mint
Topic - 5 Rules of Money
The 5 rules of money are
- split savings from spending,
- build an emergency fund,
- insurance is not investment,
- get real about real estate as this cannot be the only asset class that you should invest in, and - give your money an equity exposure.
In addition, whenever any product offers stupendous returns without much risk, you must dig deeper to find out if there is anything fishy
On having equity exposure, some people misunderstand this to buying direct stocks. Remember mutual funds are a well-regulated product where experts having domain knowledge and organisational support take care of money. In contrast, if you invest in direct stocks you should do it only if you have the time and knowledge to do it
Gaurav Goyal, National Head - Sales & Distribution, Principal MF
Topic - Simple & Smart Solutions for MF investors
SIP has evolved over the years. Now you can top up your SIP, pause your SIP, name your SIP to ensure you have a dil ka rishta with the goal and opt for perpetual SIP so that there is no hassle to renew it. Investors can also opt for SWP to ensure regular income.
To overcome behavioural biases, you can use triggers. This allows you to control your emotions and stay disciplined. For instance, capital appreciation triggers will allow you to book profit after a pre-decided rise in the market. Stop loss trigger will limit your losses. Index trigger will ensure you invest after a certain percentage of correction in the market.
Further, investors should work with a financial coach who can guide them about these features
Venugopal Mangat, Head - Equities, L&T MF
Topic - Decoding recent trends in equity markets
Quantitative easing by central banks and surplus liquidity across the globe have played a major role in equity market recovery
Would strongly recommend multi cap funds at this point. Since markets have recovered quite sharply, investors should invest in equity funds in a staggered manner
Marzban Irani, CIO-Debt, LIC MF
Topic - How to set the right expectation from debt funds
As interest rates and inflation have declined over the years, investors should also pare down their return expectations from fixed income products accordingly. When you invest in debt funds, there are two rules. Rule 1 invest in a debt fund that could not lead to loss in capital. And rule 2 is never forget rule 1.
Would recommend a banking & PSU fund if investors have a 3-year investment horizon
Dhirendra Kumar, Founder, Value Research
Topic - Your MF queries answered!
Value has been struggling not only in India but across the globe. Even Warren Buffet is having a tough time in the last 10-15 years because of the value strategy. However, the value strategy has shown some signs of recovery in the recent past. So I would recommend having some allocation to value strategy
The first battle for any investor is to select the right category of fund. Next, check performance of a fund during a rising and falling market. If it has outperformed during both the up and down of the cycle, you can opt for it
Around 4-5 funds will work for most investors. If I have to choose 2 categories each from equity and debt, those are aggressive hybrid fund, ELSS or multi cap fund, short duration fund and ultra-short duration fund
Investing in an international fund is a meaningful diversification
A diversified equity fund can easily give you 10.5% return in the long run
Stay away from infrastructure funds now
I feel more comfortable about recommending mutual funds now than I was 30 years ago because of the transparency and regulations. MFs can go wrong but they cannot do something fishy.
Amit Tripathi, CIO-Fixed Income Investments, Nippon India MF
Bringing back investor faith in debt funds
What went wrong in debt funds recently is the illiquidity in debt funds got hidden in an increasing AUM environment. Illiquidity has hurt debt funds more than credit risk in the recent past. Another part of the problem in debt funds has been lopsided communication with only the bright side being conveyed in the last few years
The solution is to ensure a discipline in managing debt funds with defined boundaries and adherence on risk, ensuring predictable end results, sticking to the mandate and not trying to overshoot it and communicate the risk rather than focusing on flows and returns
Panel discussion on Rebuilding your debt fund portfolio
Prashant Pimple, Senior Fund Manager - Fixed Income Nippon India MF; Manoj Rane, Partner Sionic; Joydeep Sen, noted author & trainer; Prem Khatri
Prashant Pimple: If investors are sure about the asset class and the investment horizon, they are unlikely to end up with negative returns from mutual funds. If you want to build an emergency fund, go for overnight or liquid funds. For an investment horizon of 1-3 years, you can opt for high quality corporate bond funds and Banking & PSU bond funds. If you have a 10 year investment horizon, I will recommend gilts or dynamic bond funds
Manoj Rane: At this point, all you need to keep in mind while investing in debt funds is safety, safety and safety. Do not have any guilt while investing in gilt. For an investment horizon of 1-3 years, opt for Banking & PSU bond funds. For 10-year investment horizon, opt for gilt funds
Joydeep Sen: While picking a debt fund, the first challenge is to figure out the category that suits your requirement from SEBI’s 16 defined debt fund categories. Next, you need to check the AMC style and then the track record of the fund and fund manager. If you want to park it for emergency, go for liquid funds. For an investment horizon of 1-3 years, you can opt for Banking & PSU bond funds. If you have a 10-year investment horizon, opt for gilts or dynamic bond funds
Prof. Raj Raghunathan, Professor of Business at McCombs School of Business, University of Texas
Topic - Money and Happiness
Going for vacations, re-prioritizing relationships and seeking internal control are the mantras to happiness and not just earning money.
Money is important but if you are earning it to show off you will be deprived of happiness. Use money to get experiences such as learning new skills or going out with family rather than to satisfy your materialistic urges to show off
