CEO Speak

Mutual funds and the Digital Journey

Getting sound and timely financial advice is always desirable for an investor. However the trend in the last few months has clearly shifted from the advisor meeting you in person or you assigning time on your weekend to your advisor to come to your home, have a cup of tea with you and review your portfolio. Most of us have either adapted to technologies like Zoom, Web-ex, MS Teams, etc either by volition or by necessity in the last few months. Embracing technology to make your life easy and increase efficiency has been the narrative for a while now and it is pretty much staring at your face now. But have you really adapted to technology enough?

Think about it – (going by the common 20-60-20 rule of adaption to change)

  • Are you in the 20% of the crowd which has embraced the digital way wholeheartedly?
  • Are you the 60% who have adapted to some digital ways but are still undecided or uninitiated on many aspects of your daily routine that can shift to digital?
  • Or are you the 20% who is just not convinced about the digital transformation in personal space at all and want to stick to your old habits?

Today at L&T Mutual funds we have equipped ourselves to serve our customers on the digital platform where you can invest and redeem online as well as have your service requests executed online. We also strongly believe in empowering our distributors and advisors who are a critical connection between the funds and the customer. Our revamped “Digital Dost” platform empowers our advisors to connect with you, advise you, track your portfolio, give recommendations and thereafter help you with the transactions - all through a digitised journey.

Your Financial Advisor is your partner:

Financial advisors are your partners in the journey of your life goals. If you are busy and do not have the time to manage the detailing of your investment portfolio, the financial advisor does it for you. We are going to be done with half of the financial year this month, and if you have not reviewed and taken stock of your financial asset allocation, we recommend you do it. You have the option of doing the following right from your home:

  • Video chat with your Financial Advisor
  • View and understand recommendations from your advisor online
  • Your advisor does online tracking of investments
  • Your advisor can send you online portfolio updates
  • Transact online

Not just SIP under the Systematic Umbrella

We also believe that SIP (Systematic Investment Plan) is a great way to invest in the equity markets. It helps in wealth creation over a long horizon of time. While we talk about SIPs a lot, there are also two very useful tools of investment under the “systematic“ umbrella.

Systematic Transfer Plan (STP):

While SIP creates wealth over the long term, it is also important to hedge our risk as we get close to our financial or life goals. For example, when we have built a kitty for our retirement as the financial goal, closer to the goal, it may be prudent to hedge the risk that can be posed by sudden volatility on the markets on our corpus. This is when an STP out of the corpus into a low-risk fund helps in judiciously protect our retirement corpus.

Another way can be to do STP from a debt fund to an equity fund for investors who do not want to invest lumpsum into equity.

Systematic Withdrawal Plan (SWP):

This is a systematic way to look forward to achieving regular cash flows from a corpus in mutual funds. This is also sometimes beautifully used by investors with no regular income who have their corpus created and aim to manage their monthly cash flows through the SWP route. Your corpus still keeps working hard to get you returns as per the fund’s investment objective that you have invested in while taking care of your periodic cash requirements through the SWP mode.

So it may be wise to touch base with your financial advisor to help you take stock of your financial goals. And all this can be done digitally!

Disclaimer – The article (including market views expressed herein) is for general information only and does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. The article provides general information and comparisons made (if any) are only for illustration purposes. Investments in mutual funds and secondary markets inherently involve risks and recipient should consult their legal, tax and financial advisors before investing. Recipient of this document should understand that statements made herein regarding future prospects may not be realized. Recipient should also understand that any reference to the indices/ sectors/ securities/ schemes etc. in the article is only for illustration purpose and are NOT stock recommendation(s) from the author or L&T Investment Management Limited, the asset management company of L&T Mutual Fund (“the Fund”) or any of its associates. Any performance information shown refers to the past and should not be seen as an indication of future returns. The value of investments and any income from them can go down as well as up. The distribution of the article in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of the article are required to inform themselves about, and to observe, any such restrictions.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.