Expert View: Avinash Satwalekar, President – Franklin Templeton, India, in a conversation with Mint, highlighted that SIP-led goal-based investing is the right way to navigate stock market volatility. While it is normal to get frustrated by the lack of returns by the market, he emphasised that SIPs are made for such periods.
Satwalekar also highlighted the thought behind his Change the Soch campaign and why women investors tend to outperform their male counterparts. Edited excerpts:
Nifty has not really moved in the last 18 months. What would be your advice to SIP investors in this environment?
SIP is a systematic investment plan. The reason behind the systematic nature of the investment is essentially to try to get the emotional aspect out of the investment.
We all know how damaging the behavioural aspect can be for a portfolio. But nonetheless, we are humans. It doesn’t matter if you are a professional investor and you have been doing it for 30 years, 40 years; we all go through those kinds of cycles.
But the truth is nobody likes to see red on their portfolios.
But we have to understand that SIP is geared for such times. Investors tend to make stupid decisions when they get frustrated or see some movements quickly. But if you just let the SIP do what it is supposed to do, your long-term wealth creation is set.
I would advise continuing with your SIPs based on your goals. Stay invested rather than getting spooked by the market.
It’s impossible to predict market shocks. But how can one create a portfolio which can reduce downside risks?
Anytime you have had a disruption in the market, you are actually better off sticking to whatever it is that you are investing in.
But if we are talking generally about reducing downside risk, investors must understand that equities tend to be at the upper end of the risk curve or the upper end of the volatility curve.
Therefore, bringing in an asset that has exactly the opposite behaviour can reduce the downside.
So, either you do a multi-asset fund or a balanced advantage fund, but you bring a dampener to the volatility.
But is it good for everyone? The answer really depends on what your objective is.
If I am relatively young, I would much rather have an equity exposure that is higher because my goals are longer-term in nature, and equity has consistently delivered if you look at it in the long term.
But if I am trying to time the market, which I do not recommend or advocate for anybody, then a hybrid makes sense.
But you must know that if you reduce the risk, your returns will also be compromised. You cannot have both.
Right now, maybe the direction is down, but it allows me to buy more units and lower my average cost.
Which sectors look insulated amid the US-Iran war?
Anything that isn’t necessarily driven by the oil disruption is more insulated from the stress related to the US-Iran war. Sectors more domestically oriented are better placed.
Banks, for instance, are necessary for an economy to run and grow. The longer-term vision for India has not changed, which means that a solid banking sector is going to be the outcome.
One can look at healthcare, too. For this sector, it does not matter whether oil is at a $100 or $60.
Now, if I’m looking at sectors that are likely to get impacted, the obvious ones are airlines, anything related to tourism, such as hotels and restaurants etc.
You launched Change the Soch campaign aimed at educating women investors. What was your biggest learning and takeaway?
The idea behind the ‘Change the Soch’ campaign was very simple – to empower women to make their own financial decisions.
What we found was that a majority of women were not taking investment decisions in their own homes and finances, and it was being done by someone else, typically the closest male member in the family.
While we have noticed that this is definitely a problem in the T-30s cities, it is an even bigger problem in the B-30 when you think about awareness and access. What we found was that the awareness around mutual funds is almost non-existent right now.
It almost didn’t matter what the social construct was; the single number one requirement for most women was education for their children.
When you were talking to women, the idea that just because you are in a Tier 1 versus a Tier 3 city, your focus would change—that wasn’t true. Your access changed, your knowledge changed, but your focus didn’t.
Breaking it down, three things stood out. First, cultural conditioning. There is a view that finance should remain in the male domain, while other, softer responsibilities fall within the female domain. Overcoming that hurdle remains a significant challenge across many parts of the country.
Second is knowledge and awareness. If I am not aware of mutual funds, how can I be expected to invest in them? If I am not aware of inflation risk, or what my returns should ideally look like, how do I make informed decisions?
The third is confidence. Confidence comes from knowledge and awareness, and with confidence comes conviction.
What makes a woman investor stand out from her male counterpart?
There are tons of studies that show that women investors outperform men in terms of returns. So now the question you asked is really quite pertinent is because what makes them different?
My observation is that women are very goal-oriented. They are not constantly talking about what return I will get.
And that’s the critical difference — male investors tend to get sucked into the return equation. You need to be more goal-focused; otherwise, the bias sets in.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
