CEO Speak

2020 – A year like never before! None of us have lived through a tumultuous year such as 2020. We were stunned by the fact that countries could actually get into a lockdown and stall normal life as it existed before. Yet we found quick ways of adapting to the new way of functioning and how! We lost lives and livelihoods, struggled running shops, worked from homes, schooled from homes and slowly got back on our feet as the lockdown eased. A year like 2020 made each one of us reflect, take stock and in some way taught all of us to be content with basics and minimal.

The mutual fund industry also saw severe volatility throughout the year. The S&P BSE Sensex was at 40,000 levels in January 2020, fell to 29,000 levels in March 2020 and made a phenomenal turnaround as the lockdown started easing out. December 2020 has seen S&P BSE Sensex at an all-time high level of 47,896*.

I ask myself how much should we cheer about these levels. And my answer to the question is that – let us stick to basics. Fundamentals of investing remain to be having a financial goal, assessing risk appetite and asset allocation. As we told our investors not to get panicked with the downfall as it happened in March 2020, we would also want to sensitise all our investors not to get overwhelmed with 47,000 levels. Please assess your financial goals and stay invested or keep investing through SIPs (Systematic Investment Plans) into equity mutual funds. Equity as an asset class has now proven historical data points, investing in the equity markets have helped in wealth creation over a longer time horizon.

As one can see in the historical chart for the S&P BSE Sensex plotted since Dec 2000 up till Dec 2020. Despite every trough, the markets have given a remarkably positive returns, and people who have stayed invested or continued investing through SIPs have generated remarkable wealth and have got healthier returns.

S&P BSE Sensex Over 20 Years

Past performance may or may not be sustained in future. For details refer note below

There has been a “V-shaped” recovery since Jun’20. Rural India continues to show growth momentum. Formalization of the economy and reforms taken by government will continue to support the growth seen over the medium to long term. We are going to witness the emergence of India as a strong manufacturing destination under the broader theme of Atmanirbhar Bharat and Make in India. The sustained GST collection and several other data points show the economy moving close to normal across most segments.

With that thought we look forward to a better 2021. As we draw curtains in 2020, our heart goes out to all those who have suffered a loss due to this pandemic and our gratitude to all the brave warriors who have worked relentlessly in the essential services and healthcare. On behalf of the entire team at L&T Mutual Fund, we wish you a Happy, Healthy and Safe 2021.

Source: MFIE, BSE.

Note: If time period is more than 1 year then CAGR is used and if it is less than 1 year then it is absolute returns. S&P BSE Sensex inception date is April 3, 1979. The graph shows data for 20 years only.

*As on Dec 31, 2020, S&P BSE Sensex has reached its all-time high value and its closing value was 47,751.33.

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.

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