There are many good businesses to buy and stay invested: Atul Bhole, DSP MF

Edited excerpt:

> There has been a possibility of a huge fall in the markets for a long time. Could China’s Evergrande Crisis Be the Trigger?

The market has seen a sharp uptick in the last three to four months and it seems that overbought is taking place, at least from a near-term perspective. It will be impossible to predict which event will lead to a correction and its timing as the market continues to mount a wall of worries.

While the Evergrande crisis may cause some growth slowdown in China, it may not cause any systemic issues given the Chinese government’s ability and track record of acting quickly. The comments and actions of global central banks, particularly the US Federal Reserve, will be the most important events going forward.

Q. The fixed asset allocation for DSP Flexi Cap Fund is 65-100% Equity. But, at present, the fund is around 97 per cent equity. Do market conditions warrant a cut in equity allocation?

Equities as an asset class are in a sweet spot, given the powerful macro-environment evolving globally, where growth is finally making a comeback with some degree of inflation. Equities benefit from adequate liquidity and low interest rates as normalization of easy monetary policies is likely to be very gradual. In the case of India too, all the drivers of the economy i.e. exports, infrastructure, real estate, and finally consumption are set to fire. Fortunately, we have many good businesses in these disciplines that are run by very competent managements to buy and stay invested. All our focus is on right stock selection as compared to taking market calls which proves to be futile most of the time.

Q. How will the demand for a passive style of investment impact the mutual fund industry?

Passive investing has its merits in terms of index neutrality and low fees. Its ratio to Overall Asset Under Management (AUM) can definitely increase. However, we see that the growth in overall AUM will be quite strong in itself, and active investments are still making up a large part of it. Any investment style does better than the other in a particular market setting. Over the years, growth has been slow and some large corporates have done well, benefiting from passive investment. As we again enter a broad-based growth phase, active managers have the opportunity to generate alpha by leveraging their stock selection capability.

Q. If any new investor is coming in the market ₹1 lakh in hand, what should be his strategy?

Our outlook on the market remains stable at these levels as well. The macro situation is favorable and is getting better. This certainly reflects an increase in corporate earnings in the times to come. We would advise investors to stick to their current asset allocation and stay invested instead of adjusting to market levels. If the allocation pattern requires investment in equities, the investor can go for meeting it in one go or through Systematic Transfer Plan (STP) over the next three-six months. It is very important to note that after such a breakneck rally, a rebound cannot be expected in the near term and investment needs to last more than five-seven years to expect good returns from these levels. Is.

Q. What was the reason behind the launch of the old fund offering of DSP Flexi Cap Fund?

We wanted to highlight the scheme in which we are providing clarity on the way the fund is managed, stock selection structure etc. Investors can also check the current portfolio and track record. In the flurry of new fund offers (NFOs), we thought this would serve as a better solution for ‘known freaks’ investors, especially when many are concerned about a sharp rally and expensive valuations. We have a constructive view of the market and as the market continues its upward journey, climbing over many walls of concerns, investing in a ready running portfolio that is participating in Upmove, a Creating a new portfolio over the period may serve the purpose better. Time.

Q. Do you see any impact on the mutual fund industry from cryptocurrencies being regulated as an asset or commodity?

Any volatility in this category would invite volatility in the markets, given the wealth and scale attracted by cryptocurrencies over the past few years. All other assets could see some correction in the short term if the regulations lead to a massive drop in crypto values ​​and wealth destruction. However, stock prices have underlying business unlike crypto and should see a surge soon with allocations shifting. It would be better if governments and central banks start regulating cryptocurrencies as soon as possible before the bubble gets bigger.