CEO Speak April 2022
April happens to be the first month of the new financial year and a lot of us consume ourselves in goal setting during this month. Whether one is self-employed or salaried, detailed goal-setting of business expansion or sales delivery has become a part of ways of working during this time of the year. It is also the time for personal goals, especially on the personal finances front. Retail investors look at planning for their tax saving avenues and as many get raises during this period, they also look at new or increased monthly savings. While mutual funds as an investment tool have come a long way in the last 10 years, the new and the uninitiated ones are often sceptical or wary of the market uncertainty.
Case in point is the month of April which continued to be uncertain and volatile. The global geopolitical pressures and inflation worries continued which drove FII selling, and the Nifty declined 2%. However, local buying support helped the BSE Mid-cap index and BSE Smallcap Index to rise 1.3%/1.4%, respectively outperforming the Nifty. Geopolitical uncertainties dominated the narrative for the Indian economy as well, which faces the risk of increasing crude oil prices and inflation.
As I wrote at the end of FY 21-22 that we should all be geared up for some volatility and uncertainties, we also emphasised the importance of rebalancing portfolio and sticking to the basics of investing. Let me now also emphasis on the benefits of the mutual fund industry for those who are still second guessing the power of the mutual funds as a viable alternate financial investment vehicle.
Growing Confidence in Mutual Funds
We believe and recommend to every retail investor to assess ones portfolio, take stock of their investment goals and investment horizons. Equities have generally outperformed all asset classes over a longer period of time. Hence, when ones investment horizon is long-term, equity mutual funds continue to be an attractive and prudent investment option.
With traditional products like Bank term deposits giving reasonable returns, investors are increasingly looking at Mutual Funds as a viable long-term financial asset. This is being observed in the steady inflows in Mutual funds in India where the AUM stands at 37.5 lakh Cr as on 31st March 2022 and the consistent growth in the number of customers investing into mutual funds.
Leveraging on active management
So if you are thinking about how do I assess a good quality stock in this volatile market, or how much do I track such a portfolio of stocks because I would want to ideally atleast beat inflation and get a healthy return, it may be wise for you to hence, invest through a Mutual Fund. It’s a lot of specialised research which is done by professionals and moreover mutual funds are managed actively by the fund managers. After all, concepts like financial goal setting, risk-taking ability and asset allocation are the fundamental steppingstones for prudent investments. And if the basics are clear, then uncertain periods like the current phase in the market will not bother an investor whose basic financial goal for investment into an equity mutual fund was, for eg., to build a retirement corpus. If your investment horizon is over ten years and if you are investing through SIP (Systematic Investment Plan) mode, then short term ups or downs should not cause worry in you.
So while you take stock of your portfolio, do your tax planning or set your goals, look at your asset allocation, start a new SIP, and begin a new journey into the equity funds. Our belief has always been long term investments.
Set your financial goals with the same objectivity as you set your goals at work.

Source: Moneycontrol, BSE, AMFI

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