GDP is down, the EU is tottering, India faces a ratings downgrade and a rate cut may be on the cards. Cafemutual spoke to a few advisors to find out the course of action they are advocating.
Vinod Jain:
Liquid funds are ideal
Clients are not committing money in equity funds at this juncture.
Clients are little sceptical about mutual funds now. We are extremely bearish
on the way economy is moving. We are asking clients to park money in liquid
funds where they’ll not lose money. We are advising investors who are familiar
with equities to increase allocation in equity funds through SIPs depending on
their time horizon. Redemptions stop when the market goes below 17,000. They
redeem if market goes beyond 17,000.
Manoj Garg: As custodians of investor wealth,
we should constantly revisit asset allocation
We all are working in a constantly
changing scenario where the concept of "invest and forget" is now
passé. India is passing through a very turbulent phase where other countries
and of course, we Indians, are keenly watching the steps of the government. We
had successfully faced the storm of 2008 and now we are in the midst of the
storm of 2012. As advisors, we are the custodians of our investor's faith and
it is our duty to assure and re-assure each of our investors that their journey
to achieve their financial goals is on track.
Asset allocation, which
the investor would have agreed upon, should constantly be revisited. So, in
such times, the need for revisiting a portfolio on a constant basis is of the utmost
importance.
Pranav Muzumdar: You have to play safe with client’s money
We are advising our clients to go for debt funds. Even liquid funds are giving better returns. You have to play safe with client’s money. We are also buying some good quality stocks and holding them. People who have invested in equity in the last four years have not made any money. We are advising to continue SIPs and there’s no harm in starting new SIPs in equity funds now. We are also doing STPs from liquid or short-term debt funds to equity funds. We are not recommending lump sum investments in equity.
Kanak Jain: Amid the doom, there is a silver
lining
Since it is a downturn, it is the right time
to re-look at equity. Everything is tottering. This means we are buying at
lower rates. But let’s do this in a systematic way. The focus should be on
large caps. When everything is gloomy, there’s always a silver lining somewhere.
Dr Ramakant Mahawar: I have factored in the possibility of a
downturn
I have studied the Indian economy from 1980 to 2011, the average GDP growth rate was around 6.5% year-on-year. After the liberalization of 1991 also, our growth was in this range till 2002. From 2003 to 2007, we got super normal growth of 9% plus. However, the average is around 6.5% even after taking that period into consideration.
I have based all my investment calculations on a growth rate of 6.5%, there could be variance of around 1% for any given year. I am really not bothered about this figure; I just concentrate on my investments.
I do visit client portfolios, sometimes once or twice a year. I don’t think I need to revisit portfolios at this juncture as these negative factors have been taken into account when the investments were made and the possibilities of these events have been accounted for.
Sougata
Mitra: Downturn presents a good buying opportunity
The portfolio of a client needs to be monitored based on his asset
allocation. Most of my investors are retail investors who have made their
investments through the SIP mode. It is their first step into the realm of
capital markets, as they do not have demat accounts and hence have not held
shares of any company whatsoever. To some of them who are salaried individuals,
I have represented SIP in equity-oriented MFs as an investment for the long
term and hence to be seen as somewhat similar to the PF deductions which take
place every month.
While the downturn certainly shows most investments to be in the
red, given the long term potential of equities to consistently outperform all
other asset classes, it is more beneficial for the investor to continue SIPs,
rather than shift to less risky asset classes and miss out on the opportunity
to accumulate units at knocked down NAVs.
However, for investors who had been contemplating investing in fixed
deposits, due to the prevalent high interest rates, I have offered FMPs as an
investment option to increase their post tax returns. Some investors have
seized this opportunity and apart from FMPs, have also started investing their
surplus funds in liquid funds.
