In his recent interview to CNBC-TV18, Madhu Kela, Chief Investment Strategist of Reliance Capital advised investors to be part of India's growth story by investing in Mutual Funds. According to Madhu Kela, now the MF industry and the fund managers have matured and along with that the investors also have matured, for example now if there is a fall in the market, investors instead of panicking think it as an investment opportunity.
2. We cannot compare the returns generated by stock markets with Fixed deposits. For instance, Reliance growth for an NAV was Rs 10 in 1996, it was Rs 12 in 2001-2002 and now it is Rs 950. Reliance Banking Fund started 10 years back is now up 20 times. So, there is no comparison and it is tax free.
3. Indian investors have become very smart and fund managers over a period of time because of the experience have become seasoned. The best is yet to come over the next decade or so.
4. Don’t ask what to buy and when to buy, you should ask how much to buy and for how long you must buy it. So, when you want to buy a lot, when you want to buy for a longer period of time, then you would want the market to correct a little bit and use that correction to enter in the market.
5. Pharmaceutical Sector: There is a lot of fear which is there like people are thinking all the manufacturing will shift to America. For any pharmaceutical company whether it is generic or otherwise, to go and setup a plant and to produce a drug, it takes minimum four to five years of cycle time because you setup a plant, you get the plant approved by FDA, then you file drug from the plant, then you get those drugs approved from FDA, so, it is not some trading company which can just shift its base. So, I think there is a lot of pessimism which is being surrounded in this sector. Valuations have come to reasonable level as compared to where the markets are also, so, I would say selectively it is an opportunity to buy.
6. If you are a common man who has 9-5 some other job, it is best that you leave money with mutual funds who have a track record of 10-20 years of going in a good market or bad market and consistently generating return.
“If you feel you have missed the rally and have seen someone make money, do not be nervous because this is only a trailer, the whole picture is yet to come. So it is never a wrong time or bad time – invest methodically, systematically – consult a proper person who has been advising on wealth management – then invest money- have faith in India, have faith in market,’’
Below are the Main Takeaways from his Interview
1. While investing outside of MFs you are trying to time the market which his very difficult but MFs by force are 95 percent invested in all periods of market and the portfolio is well diversified. Also at any given time investment is done in 40-50 companies so even if something goes wrong with one or two companies other investments remain safe.2. We cannot compare the returns generated by stock markets with Fixed deposits. For instance, Reliance growth for an NAV was Rs 10 in 1996, it was Rs 12 in 2001-2002 and now it is Rs 950. Reliance Banking Fund started 10 years back is now up 20 times. So, there is no comparison and it is tax free.
3. Indian investors have become very smart and fund managers over a period of time because of the experience have become seasoned. The best is yet to come over the next decade or so.
4. Don’t ask what to buy and when to buy, you should ask how much to buy and for how long you must buy it. So, when you want to buy a lot, when you want to buy for a longer period of time, then you would want the market to correct a little bit and use that correction to enter in the market.
5. Pharmaceutical Sector: There is a lot of fear which is there like people are thinking all the manufacturing will shift to America. For any pharmaceutical company whether it is generic or otherwise, to go and setup a plant and to produce a drug, it takes minimum four to five years of cycle time because you setup a plant, you get the plant approved by FDA, then you file drug from the plant, then you get those drugs approved from FDA, so, it is not some trading company which can just shift its base. So, I think there is a lot of pessimism which is being surrounded in this sector. Valuations have come to reasonable level as compared to where the markets are also, so, I would say selectively it is an opportunity to buy.
6. If you are a common man who has 9-5 some other job, it is best that you leave money with mutual funds who have a track record of 10-20 years of going in a good market or bad market and consistently generating return.
7. Investment is a skillful job!!. If you are an investor and you are serious about investment, study well an invest. Or else reach out to people who are experienced like mutual funds.
8. Identify the sector you want to invest and then find the potential value investments by looking at the promoters and industry growth factors.
8. Identify the sector you want to invest and then find the potential value investments by looking at the promoters and industry growth factors.
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