In an interview with CNBC-TV18, N Sethuram, chief information officer at Daiwa Mutual Funds, gave his views on strategies to adopt while investing.
Below is a verbatim transcript of the interview on CNBC-TV18. Also watch the accompanying videos.
Latha Venkatesh: What is the sense you are getting? Have fundamentals distinctly improved? Also is there a sense that liquidity even from the domestic markets has improved because the last quarter numbers from the Association of Mutual Funds in India (AMFI) are indicating a slight rise in the asset under management (AUM) with mutual funds? Do you think there is a little more even domestic cash to put in?
Sethuram: Yes, I think liquidity is definitely coming back into the market. We have seen a spell where FIIs have been negative into the equity markets and we have seen the markets correcting during that phase. But now that FIIs are also started participating into the market, we have seen this very buoyant phase of the market over the last couple of weeks and as long as the sentiment remains good, I think the markets should continue to look up.
Caller query: I want to invest Rs 2,500 per month in a systematic investment plan for a period of 15 years. What kind of funds would you advise?
Sethuram: The investor can invest in three to five SIPs. This will help him in case one or two funds do not perform as per expectations. The investor should invest in funds which have a good track record. There are also new funds where there is novel future or innovative future offering better returns or low risk. The investor can take a look at such funds as well. However, the investor should remain selective.
Latha Venkatesh: Any advice as to whether he should buy equity funds or whether he should buy balanced funds, should all the five funds be equity funds?
Sethuram: The diversification can be across asset categories also. Today, you are having a wide variety of funds. You can choose from a debt fund, you can choose from an equity fund or a balanced fund. In case, there is a tax benefit to be had, he can choose an ELSS and there are also gold ETFs, which are available. As time goes on, there will be more and more new types of funds, which will emerge in the market.
So the investor should be choosing his fund pattern based on his risk profile. If the money, which you are saving, is very important or vital for your future and you cannot afford to lose it, then I would suggest that you should go for a fund, which will have a lower risk profile.
In that category a blended fund or a debt fund will give you safer returns although the returns maybe slightly lower.
Caller query: Should I invest in mutual funds or in insurance?
Sethuram: It would be more advisable if you can choose insurance. Insurance is very important in a person