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Excellent article, covering the basics of equity investment under different market conditions. Looking forward to more such articles in future.
Excellent parameter to judge mutual fund investment in today context but what is the correlation of different class product in above context. Please explain these matrix in this regard also. Different AMC has different module to follow but as an advisor what should be the role for investors.
As usual hard data points to support an argument. The best point i liked was the always long term argument, given the levels at which the markets are trading it makes a lot of sense to be putting lumpsum investments of our clients in these asset allocator type products/solutions. Mr bond is now truly Mr equity too.
Congratulations for a great article. You are providing valuable inputs to advisors. On the topic of asset allocation, the challenge is to apply the PE and PB ratios to a portfolio of funds ( whose PE and PB ratios may vary based on type of funds( Mid cap, small cap etc) and also based on underlying stocks( example HDFC Bank may have high valuation and contribute to portfolio PE, yet may be required). How does one realign / rebalance the portfolio with these ratios and still get the portfolio right. Its a delicate balance, right? Once again thanks for sharing your views on the subject
I always admire the kind of analysis & data points which you showcase. What I learnt from this is, " The way traffic signal on roads is used to avoid accidents, similarly these signals can be used to avoid irrational decision which advisors & investors make" The only difference between investors liking or not liking mutual funds is their past experience. And experience of most of the investors are good who had invested in green & yellow zones and investors who jumps in when the market is in red zone becomes FD lovers. And this hold true for advisors as well. They push what is easy to sell. Equity when the market mood is good but its in the red zone and debts when market is bad, but offers great opportunity for creating investors wealth. The fact is advisors/ investors behaviour is riskier than the portfolio risk. ?? and they can overcome that by using these investment signals.