You’ve always given the simple message, stick to your asset allocation in fear and greed. 80% of wealth is created by good asset allocation. Be a disciplined investor, ignore the noise and volatility short term, long term stocks and the right asset allocation will help you reach your financial goals.
When there is fear, then you have to consider the investment. When there is greed, of course, you have to be careful. There is absolutely no doubt about it. Building a long-term portfolio will ultimately create wealth, and mutual funds do this quite consistently.
I am extremely proud to be a part of the mutual fund industry and also extremely proud to be a part of the Mutual Fund Association of India and to support the industry for overall growth which can contribute to the country and also serve the large and growing pool of investors. needs in the country.
ET Now: There is a trend towards SIPs. Indians are taking a leap of faith by investing their savings in growth assets such as stocks. Is the trend here to stay or is this SIP culture a bull market phenomenon?
To Balasubramanian: How to invest in SIP has now become an integral part of everyone’s thinking. Sometimes I make a joke or hear people say that a bunch of people who have invested in mutual funds are probably going to scratch their heads and say just let me think or check my portfolio. When you ask the same group of people that you have invested in SIP, the answer would probably be yes. This is why SIP is now a way of life for investors in the country.
When I was president of AMFI in 2016-17, we launched Sahi Hai mutual fund as a campaign. Obviously this has created forays into the minds of Indian investors and savers about mutual funds and has had a huge impact in terms of SIP. As the size of the book grows and there are a large number of investors, almost 50% of the folios would have gone through SIP in book form. This has now created a huge counterforce to the dependence on foreign investors that we had before.
Clearly, there is still a long way to go, given that the number of underserved people in the country remains very high from an investment point of view.
On the other hand, since it is not necessary to restrict their mutual fund holdings only to Indian markets, there are also plenty of opportunities for exposure to US equities. We may be on the cusp of a tantrum tapping and the trajectory of interest rates changing. How much exposure should investors have to global equities, especially US equities in their portfolios?
Most investors in India are not initially exposed to Indian stocks themselves. So my recommendation is that every investor in the country should have exposure to stocks through mutual funds. If anyone has this exposure, they can definitely consider diversifying by investing outside of India.
I guess about 10-15% of the asset allocation could go to the US market. Now the US market has experienced 10 years of bull market and has not seen any particular year of extreme volatility. It was a one-sided move. We also need to keep this in mind that the market will not always be the same and will have its ups and downs.
Interest rates are low, so people are looking for alternative opportunities. We also need to remember that the reverse can also happen and when inflation soars and growth starts to come back quickly and the labor market is picking up quite well, then central bankers will begin the unwinding process which will likely occur before 2023. Their unfolding process will also be just as painful. Therefore, the time that we keep for the investment would, I think, be the key.
But specific to your question, certainly if someone is already exposed to India, they may have around 10% to 15% exposure in the US market given that the US markets represent the world and all that is. happening in the world is also reflected in the performance of different companies. in the form that they sell their product in the United States and outside. Therefore, you participate in Google, Facebook for their growth in India.
Hope you also behave like the consumer is back and investing because we continue to talk about it here as well.
Over the past two or three weeks, there has been an increase in the level of activity in the economy. Whether it’s the change in consumer behavior, the change in travel behavior, dining out, everything has accelerated quite aggressively. Over the next two or three months, this will remain a great activity. I will not be surprised if by the end of December the government of India enjoys a big pickup in the GST collection which has shown quite a few recently.