A. Balasubramanian, MD and CEO, Aditya Birla Sun Life MF feels that the recent correction in the equity market is likely to shift focus of Indian mutual fund industry from a product-based approach to a solution-based approach.
He feels that the recent correction has once again highlighted the importance of appropriate asset allocation in the investor's portfolio. For instance, an investor having a moderate risk appetite should park 50% of his money in equities and 50% in fixed income products to ride out volatile times.
Bala has been witnessing the ups and downs of financial markets for the last 30 years. In an interaction through ABSL MF's Facebook page, Bala shared his views on the current market dynamics and state of Indian economy. Here are the key highlights:
- A cut in the small savings rate means investors would look for alternatives. This can bring inflows to MF industry
- Market players will feel optimistic once the covid-19 curve flattens or there is some solution on the medical front
- Recent correction in the market is the sharpest in the last 30 years. This means valuations have become extremely attractive following the correction
- However, attractive valuations does not mean investors should jump to buy aggressively at this point. Investors should continue their SIP and can even look to top up their SIP. Investors looking for lumpsum investment should spread out their investment over 1-2 months through STP
- India's economy is better off compared to some of the developed economies. But our economy will see a gradual recovery rather than a V-shaped recovery
- Government providing stimulus can further support the Indian economy
- Further, if oil prices continue to hover around 25-40 US dollar for a while, it will reduce India's import bills significantly and help the economy in a big way
For more insights, you can watch the entire video by clicking here
