Eighteen years after he joined the firm as an analyst, Kunal Kapoor took over as the president at Morningstar Inc. in October 2015. He drives product development, innovation, sales and strategy for the independent research and financial securities data analysis firm. As the sixth Morningstar Investor Conference got underway in Mumbai, Kapoor spoke to Mint about the importance of diversified portfolios, and the need to focus on long- term strategies for investors and asset managers. Macroeconomic events, he says, assume less relevance the longer you remain invested. He also spoke about relevance of regulatory changes within the industry, and our regulator’s focus on investor protection. Edited excerpts:
In the current scenario of high liquidity chasing global assets and the higher risk-seeking behaviour among investors, what is the objective that Morningstar seeks to achieve?
We are big believers of diversified long-term portfolios. That may be disappointing to a lot of people who live and die by the next hot idea and the notion that you have to judge whether your investment works over the next month or two. When you build a portfolio with assets like equity, if you can’t hold for at least 3 or 5 years, you probably should not own them. The reality is that the macros will always have some noise, and it’s easy to get distracted. But the notion is that you want to invest and build portfolios, which are appropriate specifically for you. Then you want to own that for a meaningful amount of time to achieve the outcome you set out for.
Another mistake most people make is that they are attracted to the investment after it has done well and sell at the first sign of trouble. Instead of trying to bargain for lower prices, as many do while buying say groceries, investors are more excited about buying a security at a higher price. This is a behaviour bias we have to fight in order to become long-term investors.
