These are turbulent times for investors. Investment returns, which had been held aloft by loose monetary policies and low inflation, are now being buffeted by geopolitical uncertainties and supply-side constraints. Such a combination of adverse circumstances calls for a fresh perspective on investments, and the right strategy to take advantage of the volatility in equity and fixed income markets.
In keeping with these objectives, viewers were treated to an enlightening discussion on Quantum Mutual Fund and Moneycontrol present ‘Equity Outlook & How to Select the Right Fund’, hosted by Kayezad Adajania, Editor, Personal Finance – Moneycontrol. He spoke with Chirag Mehta, Chief Investment Officer, Quantum Asset Management, and Pankaj Mathpal, MD & CEO, Optima Money Managers Pvt. Ltd., about the challenges posed by pervading economic conditions and how can investors effectively deal with them.
Stepping Into Battle
Both panellists flagged deep volatility as an immediate area of concern. They also agreed on the impact of the Russia-Ukraine crisis, which has caused inflationary pressures and driven Central Banks around the world to tighten their belts. And while there is still debate about the scope and breadth of their inflation-proofing measures, Pankaj Mathpal believes it’s the start of a bear run. “You have seen many stocks correct by 20 – 30% from their 52-week high. There are chances that it can go down further by 10 – 20%.”
Not that it should deter investors. On the contrary, Pankaj Mathpal believes “it’s time to accumulate.” His only word of advice – “If you’re investing now, your horizon should be longer.” Chirag Mehta, too, pointed out the potential of value stocks to post strong earnings growth during inflationary periods. In this regard, he once again pitched Quantum’s much vaunted 12-20-80 formula, which advises investors to invest 12 months’ worth of expenses in a liquid fund, along with 20% of long term funds in Gold and 80% in equity funds.
Ready To Grow
Well diversified long-term investments should help investors take advantage of the economic revival when it comes. “We expect a good bout of growth and economic recovery to continue, which got pushed back because of inflation increase”, Chirag Mehta said, looking ahead to better days for investors. For Pankaj Mathpal, it’s also a case of picking the right funds and stocks to serve an investor’s purpose. “If you’re investing for the first time, you can start with BAF or Dynamic Asset Allocation Fund. If you want to invest for a longer term, passive funds will be better.”
The key takeaway remained that savvy investors are those who will look to invest now. And when they do, they will do it on the basis of established financial goals, instead of seeking quick and easy returns.
For more investment tips and insights, watch the full discussion here.
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