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WF: Most advisors struggle to get clients to remain invested in equity funds through market cycles. In your experience, what has been the most effective way you have got clients to remain invested for the long run?
Surya: If you can make investments goal centric and hold the investments for the desired period it will hold true. Investors do get jittery in between but it is more of handholding during the phase on uncertainty. There are also investors who are not goal centric in that case it is imparting education as well as handholding which will do the trick.
WF: Do regular portfolio reviews promote short term thinking or do they aid in getting clients to stay invested through market turbulence?
Surya: It is a combination of both and one answer does not fit all. It is good to have regular reviews but with a perspective of weeding out non- performers.
WF: When do you typically recommend exiting an equity fund? Do switches from one fund to another make clients jittery about equity investing? Does holding on to a scheme through periods of underperformance actually promote longer term investing?
Surya: Equity investments are recommended if the horizon is long term & subject to risk profile.
It is all about educating investors regarding switches.
Difficult to answer- as you need to convince investor to stay invested in underperforming schemes and give valid reasons which may also backfire.
WF: What is your approach towards profit booking? Do clients like to see realised profits from time to time in their portfolios? Does such an approach promote staying invested with the principal amount for the long term?
Surya: Yes investors do want realised profits but don't know what to do with it.
So if it has to go back to equities then why profit booking? Only at times when funds are required is when profit booking is recommended over a phased manner.
This is a difficult process & hence the key is to educate investors.
WF: How do you get conservative clients to invest into equity markets? Are hybrid products a good solution in such cases?
Surya: Hybrid funds are surely a good way to test the untested waters by the conservative investors.
But before that the start happens from debt based hybrids and only when an investor starts getting comfortable and having a long term horizon you start investing in hybrid funds.
WF: What is your view on auto-rebalancing asset allocation products - including the ones that rebalance based on valuation metrics?
Surya: It is a good strategy and a certain allocation can be held in the portfolio. However you cannot allocate the entire corpus to this auto rebalancing.
WF: The big opportunity for advisors today is to get clients to shift some of their overweight positions in property towards equity. What has been your experience on this front?
Surya: Not easy as it sounds. Issues like taxation, cash component and the past experience of investors in real estate make them hold their assets. You may even find investors wanting to invest more in real estate as real estate markets have corrected. Wish the same logic they used for equity investments!!
WF: Are clients worried now about the short to medium term outlook for equity markets, given the weak economic recovery and worries on global markets? How are you addressing these concerns?
Surya: Yes investors are concerned but the concerns are always there if not these then some other. You cannot have times when there are no concerns. So the key to investments is to remain true to principals- invest for long term and participate based on your risk profile.
WF: Where does global diversification fit into the overall equity portfolios of clients? Is it a relevant strategic priority for all clients or do you only offer it tactically to clients who are so inclined?
Surya: It is not "fit for all" strategy. The overall profile of investors is an important aspect as well as the inclination of investor. More importantly it is meant for matured investors and who understands the pro& cons of global investments.
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