Quantum MF has launched its new initiative ‘Quantum & MFD: Ek Nayi Sajhedaari’. Through a series of webinars, the initiative strives to partner with MFDs and create new success stories.
The first episode of ‘Quantum & MFD: Ek Nayi Sajhedaari’ hosted Arvind Chari, CIO-Quantum Advisors and Sorbh Gupta, Fund Manager - Equity, Quantum MF who spoke about this unique initiative while sharing deeper insights on the Indian economy as well as the MF industry. The webinar was moderated by Nishant Patnaik, Associate Editor, Cafemutual.
Here are the key highlights of the session.
‘Quantum & MFD: Ek Nayi Sajhedaari’
“We have always believed in MFDs and look forward to collaborating with them for the long term”, said Arvind and Sorbh. Creating a long term association with MFDs was the driving force behind this initiative.
The initiative strives to work towards the overall development of MFDs. Through a series of specially curated webinars, the initiative will help MFDs upgrade their knowledge. This would also give MFDs a platform to directly interact with the fund managers. Additionally, it will also extend support to MFDs for shifting from a physical to a digital model.
The initiative will also give MFDs a platform to share their professional experiences and build new connections.
Outlook on the Indian economy
India is expected to continue growing at 6-6.5%. Further, economic activities in certain sectors are back to pre-covid levels or have even surpassed those. Corporate profitability was driven by revenue growth and hit a record in Mar 21 quarter. Given the upcoming festivities, the demand is expected to rebound strongly. The rising recruitments in the IT sector can also have a multiplyer effect.
However, there exist three broad risks - expected rise in interest rate by RBI due to inflation, adverse impact on investors on discretionary spend owing to job loss & inflation and the possibility of a third wave of covid-19.
Scope of MF distribution
The investment basket of an average Indian comprises bank deposits & government saving schemes (52%), insurance & provident funds (33%), currency & others (10%) and equities & mutual funds (5%). Further, India which is home to more than 1.3 billion people, has only 2.6 crore unique mutual fund investors. This hints at the huge opportunity that the MF industry holds for MFDs.
People will require advice on mutual fund investing and the demand for advisory business is only seen increasing from here.
Investment recommendations
MFDs must advocate, ‘Saving before spending’ and could recommend a 12-80-20 allocation - 12 represents creating an emergency fund equivalent to 12 months’ expenses by investing in liquid funds/money market funds/ultrashort term funds. 20 hints at investing 20% of the portfolio in gold funds and 80 recommends 80% of portfolio allocation in equity funds. Gold is said to be an important element of asset allocation as it can act as a buffer when the other asset class underperforms.
For investors looking to invest in a lump sum in current soaring equity markets, it is advisable to follow a staggered approach. Such an amount could be split into three/four instalments for investing. Also, market capitalisation should not be the sole focus area as investment decisions are also a function of risk involved, long term view and earning levels.
Debt investors with a time horizon of two to three years can opt for dynamic funds. It is essential to check the risk labelling before investing and a low-risk fund is advisable. Investors with some risk appetite could opt for credit funds. Having said that, such investors could opt for equity for enjoying better returns at the same risk levels.
