How has been your experience with Cafemutual Confluences so far?
My experience with Cafemutual Confluence has always been good. Over the years the TED talk like format, where speakers of repute delve into varied topics, have been extremely successful. The takeaways from the confluence are short and crisp thus making it easier for the audience to absorb and retain the information.
Moreover, one finds a wide variety of distributors in the audience which help bring out the true flavor of the distributor community.
Why do you think investors can benefit from this confluence?
At Cafemutual Confluence 2020 Investment Marathon, investors will get to hear a range of topics such as mutual funds, markets, comprehensive financial planning and so on. Even if they take home 2-3 learnings from the confluence, they will turn a better investor - much smarter and wiser about managing money.
L&T MF has launched a couple of passive funds recently. Why do you think the time has come for passive funds?
We feel that an investor, as part of his/her asset allocation in equity investments, should look at both active and passive funds because a combination of both these strategies are important for a robust portfolio. For us, it is not active vs passive funds but a basket of products for investors to choose from, basis their risk profiles.
As we are slowly emerging out of lockdown, what is your roadmap for the next 12 months?
As this point in time it is very important to keep the channels of communication active for both distributors and investors. This is the time to reiterate the importance of goal-based investing and that the movements in the markets are a part of the journey towards the financial goal. This journey needs to be substantiated with data, especially to the new investor whose expectations from the market have not met the results. We need to further educate and restate the importance of concepts like risk vs return, various products and their associated risks, along with the broader aspect of financial planning. For instance, recently our newsletter for the retail investor covered the various aspects of financial planning like term insurance, health cover along with outlook on the markets and the details of the schemes.
We are leveraging technology to enrich our communication that is beyond markets and products. We will continue with our digital footprints not just in transactions but also in other forms of communication like product, investor communication and so on.
What are the three key trends that can shape the MF industry in the near future?
The pandemic has pushed all of us to look at the digital mode in as many aspects as possible. Now from onboarding clients to transactions, many aspects of our business have become digital. We hope this becomes a norm and the MF industry becomes a 100% digital industry like our stock exchanges.
Another emerging trend will be the emphasis on asset allocation and re-allocation along with setting up short-term, medium-term and long-term goals. Asset reallocation could be in focus with the movement in the market. For example, if an investor had a 60:40 equity-debt allocation, which after the correction has become say 50:50, clients should rebalance it back to a 60:40 allocation.
The third trend that we see is investors with fresh investments preferring consistent long-term performers and not limited to a few large players.
What has been the impact of coronavirus pandemic on the MF business?
The impact of the pandemic has been tremendous with reasonable shift in investor behaviour and attitude. Investors are now preferring safety by opting for high credit quality debt schemes and large-cap funds as against small-cap and mid-cap funds in equity schemes. Also, many investors have learned that they cannot time the market. March witnessed a sharp correction in equity markets. However, in Apr-July it recovered at a pace faster than expected. Therefore, those who redeemed in March learnt an important lesson about timing the market. We expect investors to become wiser in reacting to events and looking at long-term investing rather than knee jerk reactions.
Investors are also exploring and learning digital modes of transactions which will help the industry in the long run.
What support has your fund house extended to distributors to deal with covid-19 outbreak?
Following the complete lockdown in March, we realised that commission to our distribution partners might get delayed in the coming months due to various operational issues. We were one of the first fund houses to release an ad-hoc amount for distributors so that they did not face any hardship because of the delayed commission. The idea was that small distributors who depend on their commission for monthly expenses should not be left in the lurch. Moreover, we, the fund managers and the top-level management, conducted many webinars and conference calls with clients of our distribution partners, so as to alleviate the fears of the volatility of the markets as well as reiterate the importance of goal based investing.
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