Raghav Iyengar: The months of February and March turn out to be quite unique. Two years ago we had the pandemic – a phenomenon that only happens once every 100 years; the last time we had it was in 1915. In the 75 years since World War II, we have never seen a great power fight another war. We have had many wars but not a great power.
The situation is reasonably complicated. Obviously, the impact is felt. Immediately you notice an increase in oil and commodity prices. So one thing is clear: people need to prepare for higher inflation across the curve.
For people who have been a bit of a spendthrift over the past two or three years, because inflation has been brought under control, especially over the past five years, you need to take a close look at all of your expenses.
When it comes to mutual funds, many of these events look different from year to year. This one will have long term ramifications. I don’t want to make an immediate assumption. But valuations look much more attractive today than they did three or six months ago.
Second, I think retail investors were in a bit of a euphoric phase – too much money flowing into IPOs, IPO games, highest payouts – this whole story is sort of slightly over now.
I would suggest that if you are a novice, first-time investor who is a bit apprehensive, you should stick with Balanced Advantage funds. There are many available in the market. There is the Axis Balanced Advantage Fund. Everyone has their own model, so everyone has their own style of management.
We talked about it on your show. We mostly talked about hybrids and avoided the solid stock category. So, people who would follow this advice today would see much less loss on their portfolio than perhaps other investors.
The key thing about BAF funds is that it is not an Alpha fund. This is a fund where you should look at how this particular scheme fared when the markets fell. And if you can see that over a period of time, it will give you an idea of whether a fund is meeting its mandate.
But if you’re a reasonably seasoned investor and have been sitting on the sidelines waiting for valuation corrections, now is the time. You could possibly review your internal equity allocations, talk to your financial partner, and they might increase your equity allocation.
I’ve seen huge appetite or huge flows coming in, especially in Axis on days when markets fell 1000-1500 points. Many people like to buy the dip and some people have a more systematic approach, so there are STPs (systematic transfer plans) that are available. You just mechanically put it away and forget about it. Both suit me. One needs you to be a bit proactive and vigilant, and the other is, in a sense, on autopilot. It depends on your daily work, if you have the ability to peek and distribute.