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It's a TINA moment for the mutual fund industry, which will grow at 20-25 per cent annually till 2025, says Radhika Gupta, CEO, Edelweiss Asset Management.
Her aim is clear.
She is targetting an asset under management (AUM) of at least Rs 25,000 crore by the end of 2018-19.
The AUM of Edelweiss Asset Management jumped to Rs 14,000 crore, from Rs 6,000 crore, during the last one year and a half.
TINA is short for there is no alternative.
She is not without reasons.
Gold, said Gupta, has not delivered any return during the past 10 years while real estate has its own problems.
Fixed deposits are not looking attractive as real return on deposits is virtually zero.
In a bid to tap upcoming opportunities in the mutual fund space, Edelweiss AMC is planning to double its branches to 24 by the end of FY19, from 12 at present.
Gupta's conviction is Indian mutual fund industry will easily become Rs 100 lakh crore by 2025 against Rs 22 lakh crore now.
Rapid digitisation and demonetisation worked as a boon for the industry, she feels.
“We believe that the story of financialisation of assets emerged post note ban in November 2016,” Gupta added.
On the current market scenario, she told ETMarkets.com that volatility will continue in the second half too due to uncertainty over crude oil, upcoming general elections, rising interest rates globally and trade war woes.
She called on investors not to get affected by everything going on in the market.
Her counsel: One should continue with their systematic investment plans (SIPs) as earnings have hit the bottom and markets are now at the beginning of a pick-up cycle.
“We do believe that corporate earnings are improving and it is happening in a broad-based way.
Regardless of the Nifty and the Sensex, this year’s equity growth will be a lot more sustainable.
Ultimately, prices are slaves of earnings,” Gupta reasoned.
She is all for long-term play as "one election or a bit of rising crude prices does not matter for the market and investors should be clear about their financial goals".
An investor should choose financial products according to her risk profiles, she went on to say.
“If you are a high-risk investor, go for small and midcap funds in a staggered manner.
A conservative investor can choose hybrid funds.
Stick to your asset allocation and hold.
Don’t react to news,” Gupta stressed.
2017 was an easy year for investors as whatever they touched turned into gold.
So, how high net worth investors (HNIs) are dealing with 2018
"I think this year, they will look for yield.
So, they will focus on products that can manage volatility," Gupta replied.
“Hybrid funds, good quality corporate bond funds that can give you decent returns without taking any material credit risk are some of the products they must be focusing on, along with their equity investments.”
Her assessment is the consumer discretionary theme will throw up big gainers in coming years as India is moving from $2 trillion economy to $5 trillion economy which China took many years to achieve.
In addition, rising per capita income is seen to further boost this space.
“Discretionary consumption as well as some construction companies will throw (up) big gainers.
Diagnostic players in the healthcare segment and emerging financial services business will do well.
When an economy will grow, you may buy more premium biscuits, more retail will happen, people look for better air conditioners and spend on health checkup, etc,” Gupta emphasised.
Looking at some funds of Edelweiss AMC, Edelweiss Large and Mid Cap Regular Plan has delivered 3.51 per cent return on a year-to-date basis and 14 per cent in the last one year, data available with Value Research on August 4 showed.
Edelweiss Arbitrage Fund's return scorecard is 3.53 per cent so far this year and 5.93 per cent during the past one year.
Similarly, Edelweiss Balanced Advantage Fund has risen 5.61 per cent YTD and 9.87 per cent in the last one year.
What are the parameters for stock selection for Edelweiss AMC funds Gupta's answer: Good quality management, growth story with long-term earnings, potential for leadership in a particular segment as well as participation in a growing industry.
For debt fund investors, she suggests looking for the shorter end (2-3 years) of the curve for better returns and good quality corporate bond funds.
“It is a good time to look at short-term debt as a category, given that the yield has moved up now,” she explained.
Liquid funds are good for investors who would like to park their money for less than 1 month, whereas investors with time horizon of 1-6 months can go with arbitrage funds.
She also added that arbitrate funds delivers better return than liquid fund on post-tax basis.
About the recent correction in broader markets, she termed it as "technical correction"", adding that "one should not worry about the present turmoil".
Benchmark equity indices are hovering at their lifetime highs, but as much as 80 per cent of the companies on the National Stock Exchange are in the red on a year-to-date basis.
"India can never be represented by 50 companies in the Nifty index as new themes are not there in our so-called benchmark indices.
Media has given the term benchmark to the Sensex and the Nifty," Gupta said further.
Mantra for financial freedom She exhorted women investors not just to be literate, but be financially literate.
“More and more women are also coming forward to make financial decisions.
Women are always good budget keepers and decision makers at home.
Even in promoter families, women are coming forward to take decisions.
They are involved in money.
This is also going to grow,” she predicted.
On prospects of Indian companies, especially after iPhone make Apple hit a market valuation of $1 trillion last week, she said India has a collection of great names that may become multifold in coming years.
She is clear that companies with quality business will continue to grow as the journey of select largecaps in India has just started.
“Opportunities in select businesses, including banking, are limitless,” she signed off.
