Mutual funds are here to stay, and inflows are only going to get bigger

"The industry has seen a positive inflow number month on month for the last three years or so, which speaks volumes about how the retail investor has matured in the pursuit of wealth creation in equities," says Chandresh Nigam, Managing Director and Chief Executive Officer, Axis AMC in an exclusive interview with Bizz Buzz

How do you see the MF industry doing during the pandemic era?

The general trend in the equity schemes across the industry has been positive barring a few months. Over the last three months, investors have been concerned about a range of issues, including valuations, the Corona virus and the US elections. The industry has seen a positive inflow number month-on-month for the last three years or so, which speaks volumes about how the retail investor has matured in the pursuit of wealth creation in equities. Short-term profit-taking is not unjustified in an environment of rising uncertainties. Fixed income has also gained widespread recognition from retail investors and they increasingly appreciate the value of building a balanced portfolio.

I am looking at this from a long-term view. Mutual funds are here to stay and inflows are only going to get bigger as both reach a critical mass and wider acceptance. As India returns to normalcy and growth in the economy, equity investing in India remains the best way to build long-term wealth for Indians. Fixed income is ideal for investors who are looking at wealth creation and regular income (however, it depends on the market conditions).

Returns have fallen in MF due to the lockdown. How have you been able to face it and woo the investors?

Quite the contrary. The markets are temperamental in nature. As investors we should not be. Post the March lows, markets have bounced back quite well, rewarding investors in the process. Even for investors who invested prior to this, the notional losses have been wiped out as the recovery has now crossed the March highs.

As most of us in the industry keep highlighting that equity investing is only for those who have the patience to play the long game, think test match not T20. I spoke about investor maturity. We saw this during the flash crash in March and we see it again today. The equity investor of today has understood the need to stay invested. It gives me and my colleagues in the industry a great sense of achievement as through our persistent communication and investor awareness campaigns, we are now getting the retail Indian to participate in the growth story that is India and in turn building wealth.

SIPs have become more favourite in this otherwise trying times. Kindly share your views on it.

As the salaried class, the easiest way for us to build long-term wealth is to put a part of our monthly pay-check into investments like mutual funds. SIPs are a hassle-free automatic solution to do this. Today, we as an industry collect over Rs 7,200 crore as monthly SIPs from lakhs of investors across the country in bite-sized transactions as small as Rs 500.

SIP investing has worked wonders for long-term investors and today we offer this solution across equities, fixed income and even hybrid and solution-oriented strategies. What is more impressive is that investors can bundle SIPs with other solutions like insurance and top-ups. All of this makes for a hassle-free, one-stop financial planning solution through a single-integrated solution. Gone are the days where investors needed to visit branch offices in far-flung areas and wade through pesky marketers to identify a basket of solutions that fit the needs of his/her financial requirements.

Of late, all asset classes like equity, debt and gold have witnessed a rally. In this scenario, what would be your take?

I would rather emphasise on the need to allocate to asset classes over jumping from asset class to another. Timing the market does not work in the long term. The trick to a sustainable portfolio delivering consistent growth is in building one that captures the best of all. Each asset class has its own unique attributes. For example, equities are volatile but give a significant return fillip when they get going. Fixed income is a steady growth engine that focuses on stability with limited volatility when used properly. Gold is an all-weather asset class that is ideal to manage inflation. One must identify the ability to take investment risks and appropriately manage their allocation to these asset classes. For those who need a single solution, the industry offers multi-asset products that are an ideal mix of growth and stability.

SEBI has come up with its circulars on rebalancing of the portfolios of multi-cap funds and introduction of flexi-cap fund. What will be its impact on the industry as a whole and Axis MF in particular?

Axis MF has filed with SEBI to convert the Axis multicap fund to the flexicap category. Once we receive SEBI approvals, suitable notifications and exit window will be offered to investors in line with the SEBI guidelines on the fundamental attribute changes. We believe this approach would offer our existing investors the most ideal solution in terms of minimising investment risks and tax effects as investors look to rebalance portfolios as a result of this change.

Axis MF has launched Special Situation Fund. In which themes/business will this fund invest and how will it help investors to generate wealth?

The Indian equity market has witnessed some of the most dramatic swings since the beginning of the pandemic, hitting unprecedented highs and lows. The pandemic has also been notable for how it has forced all of us to embrace significant change in our daily lives and caused innovation from companies responding to the stay at home/ work from home economy. At one glance, all this change around us can seem unsettling. However, there is also a significant opportunity for us as investors to benefit from these changes.

Axis Special Situations Fund is a unique attempt by Axis AMC to create a dedicated equity fund that focuses and invests in these opportunities both across India and global markets. It is an open-ended equity scheme that follows a special situations theme focusing on disruptive growth opportunities. The fund will allow investors to capture opportunities across the entire disruption value chain. Further, the fund will be investing across both domestic and global markets as well as across the market-cap spectrum, thus allowing the investors to participate in relevant opportunities in any of the segments of the market.

What is your vision for the company?

At Axis AMC, we strive to responsibly manage money and risks to help people become financially secure and confident of a brighter and prosperous future. We take this term 'responsible' very seriously. In our line of business, we manage millions of investors' savings and hence trust is paramount if we as business aim to succeed in the long term.

For over 10 years, Axis AMC has been at the forefront of providing innovative investing solutions to our customers and the proof of the pudding is there for all to see. Through our distributors, who today count in thousands across the length and breadth of the country, we impress upon the imperative to stay truthful and do things the right way as we aspire to build wealth and prosperity for the masses in collaboration with our partners.

Your message to the retail investors. Stay invested, stay patient