The Mutual Fund Show: Stop Doing This Disservice To Yourself While Investing
Here are Gajendra Kothari’s choice of funds.
Should investors focus on broad-based equity benchmark like the NSE’s Nifty or the S&P BSE Sensex valuations while investing? The short answer to the question: No.
Sunil Subramaniam, chief executive officer at Sundaram Mutual Fund agrees. Speaking on BloombergQuint’s The Mutual Fund Show, he said investors may end of doing a disservice to themselves if they focus more on near-term valuations.
He said most fund managers would have growth stocks or companies in their portfolio, and those may start to show results later than when the investor is looking at the fund.
So, when investing in funds, don’t look at the index valuations. Neither when the valuations appear rich, nor when they appear to be cheap, he advised.
He said valuations multiples may start to look very different and a lot more reasonable with time, especially if the growth engines start to fire.
Meanwhile, Gajendra Kothari managing director and CEO of Etica Wealth Management Pvt Ltd. spoke on his choice of funds, and given below are his choice of funds across categories.
Here are edited excerpt from the conversation:
From a balanced fund perspective, you are recommending Reliance Regular Savings fund. Why this one?
It is a conservative balanced fund. It means in the equity portion of the portfolio, they are more focused on large cap space, which in the recent past underperformed in mid-cap and small-cap category. So, we see lower risk and reward can be higher. If investors have been there for some time, then a switch is not necessary.
In the large cap or mid cap fund category, you are recommending Mirae India Opportunities fund. Why this one?
It has been my personal favourite. I have been invested in this from last 7-8 years and I have seen very consistent returns over the period. Fund managers stick to label of 70-80 percent of the large cap portfolio and 20-30 percent of midcap opportunities. It is a long term fund and one can expect 15-28 percent return even in next 5-6 years going forward.
In the multicap category, you are recommending Parag Pare financial services. They are investing in a clutch of overseas companies as well. Are you not recommending pure play India dedicated multi-cap fund?
We have interacted with the fund managers and we have found comfort that they have a purely bottom up stock approach. Even in the U.S. companies, where they are putting money which is global stock kind of thing. That 30 percent of your portfolio de-risk your entire thing. For some reason, if Indian markets are to go down, then this could serve as a good buffer. The track record has been steller in the last 4-5 years.
