Is it wise to ask clients to continue SIPs even if market valuations are high? If you are not recommending them to invest in mutual funds through lumpsum in such markets, why should you advice your clients to continue SIPs, asked an online discount brokerage firm, Samco Securities, which has announced the launch of its new robo advisory and mutual fund research platform for investors called RankMF.
In a press release, the company said, “SIP is not systematic or smart investing. It is simply automated investing; starting a mutual fund SIP and continuing to invest in it at all times through market ups and down has nothing to do with systematic investing. SIP is not a smart system. The RankMF SmartSIP TM System solves this problem. Based on the margin of safety in the markets, RankMF generates signals, which you should follow for your SIPs.”
Here are these signals
● Like signal: Begin or continue your SIP when markets are reasonably valued
● Skip SIP: Skip your SIP for the month since markets are in an expensive phase offering lower value for money
● Dislike signal: Markets are extremely expensive and you should skip and sell your SIP
● 2 Likes signal: Increase your investments or double your SIP since markets are relatively cheap and offer great margin of safety or value for money.
Omkeshwar Singh who is heading Rank MF told Cafemutual that his company has the courage to say no to investors. He said, “Investment professionals always sound bullish. However, wealth creation is a journey and investors should take care of it wisely. We will strongly recommend our clients not to invest in mutual funds if valuations are expensive. We believe this will multiply wealth for our clients.”
Apart from robo advisory, the platform offers mutual fund research to investors under its section ‘Kaunsa sa mutual fund sahi hai’.
Singh said that the platform would not look at past performance to rank schemes; instead, it considers quality of portfolio to evaluate future performance.
The company said, “RankMF ratings and ranks are completely independent. It not only rates and ranks on past performance, but also on a variety of factors by using over 20 million data points such as expense ratios, standard deviation, beta, market valuations and multiples, portfolio holdings and diversification/concentration of portfolio, the cash ratio of a fund, size of the fund, the predicted yields and others. RankMF analyses the most important factor, which is the quality of actual portfolio holdings since that is going to deliver real returns to investors and not historical returns which are used by other ranking platforms.”
The platform will also recommend schemes investors should avoid. Singh said, “We will display thumps up and down to rank a scheme. If we recommend thumps up then investors can invest or increase their investment in a fund and vice versa. We are perhaps the only distributor, which will display schemes that investors should avoid. We have named it ‘Kaunsa Mutual Fund Sahi Nahi hai’.”
It is pertinent to mention that Samco Securities approached SEBI in June 2018 to launch mutual fund business.
