Where do you see the markets in three years' time?
Predicting the markets is a futile exercise. Investors may not give too much attention to market views; however, one needs to be cautious with respect to change in trend or long-term direction. In a bull market we tend to ignore risks and focus on returns. With more parameters, consistency and predictability is reduced which increases volatility. Do not change your investment philosophy based on market flavors or market levels. Sticking to your asset allocations and following disciplined investment process is key to avoid taking undue risks beyond risk appetite. While volatility will persist (and we cannot be immune to it), staying disciplined in investment will remain important and may deliver satisfying performance in the long run.
Do you see any big correction happening in the market any time soon?
Currently, we see inflation as a risk if it continues beyond a certain point. Furthermore, in the short term the Indian markets are largely driven by global factors, currency movements, government policies and domestic macro-economic conditions rather than underlying fundamentals and intrinsic value of stocks.
LIC MF Large & Midcap fund has marginally underperformed its benchmark if we consider longer periods of time. What do you think is the reason behind it?
If you look at the market performance, it has been polarized in the recent times. And due to this polarized market performance, most of the industry has underperformed the benchmark when market rises and outperforms during the fall. This typically happens as fund houses continue to follow their investment framework and strategy and do not change it based on market movements given the high impact cost on both sides while executing real trades. We believe performance also needs to be evaluated on the Risk Adjusted Return basis.
What approach will the fund take from here on?
India is one of the fastest growing economies in the world with highest proportion of millennials and we believe there exists many drivers supporting growth like consolidation, digitalization, reforms, domestic manufacturing etc.
Which sectors do you think will perform well in the next one year?
Positive on domestic consumption, private banks, logistics and we also like IT due to technology transformation globally.
How is LIC MF Large & Mid Cap Fund different from other funds in this category?
Each fund house has their own investment framework and fund managing style. What differentiates one from the other is whether you are sticking to your own framework or changing your style with market movements. This attribute is reflected in the portfolio’s turnover. We are following a disciplined approach aligned with the house investment framework. We follow a top down/bottoms-up approach for all our schemes. We have a clearly articulated investment framework. We prefer businesses of good promoters, which are scalable, having clear competitive advantage and better capital efficiency. This is where the wealth gets created over a long term. Having selected such businesses, we try to avoid overpaying for the same.
Why should distributors recommend this fund to their clients?
Our consistency in following the investment framer and not getting carried away by market flavor reflective in the portfolio turnover would be the key selling point. We focus on delivering risk-adjusted returns through investments in quality and scalable businesses.
Disclaimer: The views expressed herein are based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The information contained in this document is for general purposes only. The document is given in summary form and does not purport to be complete. The document does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. The information / data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The statements contained herein are based on our current views and involve known and unknown risk and uncertainties that could cause actual results, performance, or event to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in the future. LIC Mutual Fund Asset Management Ltd. / LIC Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investment made in the scheme(s). Neither LIC Mutual Fund Asset Management Ltd. and LIC Mutual Fund (the fund) nor any person connected with them, accepts any liability arising from the use of this document. The recipients before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein.
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