Edited interview.
As we are stepping into the new year, what are your memories of 2023?
The memory that comes to mind is the completion of the IPO of our AMC and other IPOs that hit the market along with the market hitting a new high. Fixed income market also went through a series of rate hikes, unprecedented inflation hitting the world market, creating uncertainty in the global market. And in that period, ABSL MF in India, maintained their overall momentum in serving a large pool of customer needs in the country. Several ABSL MF schemes had a tough year on the back of performance. In fact, most of our funds during the year 2022 came back on performance big time in the large categories such as large cap, flexi cap, and multi cap. And some of our thematic funds have done well. We did go through a few challenges in a few funds such as the ELSS category and MNC category. I must also mention, these funds did not suffer due to the lack of quality of investment, the underlying quality of the paper, and the underlying quality of the portfolio. But they did go through a pain period because none of the high quality, high growth companies performed during the year. So therefore, it had to go through its own challenges. And of course, money managers also must find a nice balance between these two things. And that challenge also, didn’t go through during the year.
Has market conditions forced you to change or tweak your investment strategy? What can investors expect in the new year?
Overall, from an investment strategy point of view, sticking with the basic principles of investing, investing in companies which deliver growth and available at a reasonable price. That principle demands across the scheme. Second, ensuring each of the funds are managed with the respect to the objective of these schemes and walking the talk and ensuring the portfolios are constructed in line with the strategy and basis, which we have put the risk monitoring mechanism internally to ensure every fund managers follow the principal laid out for each other the funds, and they’re being dragged and they’re being driven. And in fact, these have already yielded results during the same period. At the same time, wherever there has been a performance issue, either due to the portfolio strategy or due to the individual unwillingness to change it, as a fund house we also made some course corrections by way of changing responsibility of people and those changes of responsibility of people now bring in more accountability, more confidence in getting back the performance that now I’ve been seeing this happening across our equity schemes.
What are your thoughts on the market? The market is scaling new highs, but many uncertainties are still around.
The market will continue to show buoyancy, given the fact India fundamentally remains on a strong wicket, both because the domestic economy continues to be driven by continuous reforms. At the same time, along with global market uncertainty, India seems to be a sweet spot and therefore the market is scaling to new highs and remains buoyant. Second, the market also driven by the strong recovery in the credit growth in the banking systems seems to be an indication of the economic growth coming back. Last but not the least, the government push towards increasing the tax collections is also reflecting month-on-month growth in GST seems to be also a driver of the overall sentiment. In that context, I think the Indian market will remain bullish for the long term, but in the short term we may probably see volatility as we normally see in any equity market.
Same issues will continue to linger next year. Should investors prepare for turbulence?
Investors at the end of the day should be considering market volatility and turbulence in the market as a way of building the portfolio. As investments are being made for the long term, the market remains volatile in the short term, reflecting the incidents of uncertainty. However, investors cannot get worried about these turbulence and stop or start investing. They must look at their goal that they need to pursue. Investors should continue to focus on continuous investing.
Do you think Indian markets will be resilient to turmoil in the global market?
Yes. India, as I mentioned in my earlier comment, remain strong and a sweet spot from fundamentals point of view, policy making continues to drive the longer term growth and various initiatives of the government, such as make in India, digital India, all of them actually paying the necessary result, which reflects in the various economic indicators that we track whether interest rate in market continues to remain affordable from the borrowers point of view. And therefore, overall growth should remain supportive on the basis of the environment that we are living in. Therefore, the Indian market will remain resilient.
What will happen in the debt space? Investors had a subdued year in 2022.
I think we see a great opportunity in debt space in this market. Even the fact, interest rates have been hiked by the RBI and through policy framework and actual interest rates have also gone up. At the same time, we also see increase in corporate demand will increase the demand for funds, therefore increase in corporate banks spreads, which essentially mean from investors point of view, there is a pickup in the overall yield by one 1% or 2%, which can essentially create an opportunity for investors in the fixed income space of mutual funds. In fact, we are quite bullish this year on a huge amount of contributions coming in from fixed income which was missing in the last few years.
What is your advice to mutual fund investors, especially new investors?
New investors, I think, should continue to stay focused on building their portfolio for the long term and build a portfolio with their goal in mind through SIPs and understand market volatility is a function of the market. And building the portfolio for the long term should not be driven by the underlying market volatility and based on their goal they should make the investment for the future.
