Navneet says the long term performance of some of their biggest funds that have completed 30 years like HDFC Balanced Advantage Fund(>95,000 cr AuM) and more recently HDFC Flexicap Fund (>65,000 cr AuM)prove conclusively that (1) Good active management delivers strong alpha (no need to debate any further about vanishing alpha) and (2) Size is no constraint to delivering alpha (no need to debate any further about size restricting alpha).
Navneet is hopeful that we will bounce back from the economic slowdown we are seeing in perhaps a couple of quarters. But a structural issue that will need to be addressed by the Government is job creation in the post AI world.
We are witnessing a seismic change as big or bigger than the industrial revolution – only at that time, old and new co-existed for decades before old gradually faded out. In today’s AI-led disruption, old is giving way for new in real time, which can render millions jobless and lacking skills to participate in new opportunities that emerge in the post AI world.
For the industry, a huge task and responsibility ahead of us is to prepare 3 cr out of the 5 cr unique investors the industry has – all of whom have come in the last 4 years – and not seen a significant market drawdown yet. Most have come directly into equity funds.
All of us – AMCs and distributors – are working hard on this – but we need to do a lot more to ensure that they remain disciplined through the next significant drawdown, whenever that occurs.
Our industry today boasts of several funds with 10-20-30 years of phenomenal track records, navigating multiple rounds of market volatility and delivering handsome wealth creation. This is a message all of us need to take across the country – showcasing the merits of staying disciplined with long term investing.
For distributors, Navneet says the big opportunity now is to double their SIP books in the coming years by simply increasing SIP amounts from existing customers. Disposable incomes are rising and proactive distributors can ensure that some portion of these increases go towards SIP top-ups. Track your average SIP amount every month and ensure the trend is rising – that’s what Navneet says should be a key priority for MFDs.
Navneet is very optimistic on the new category of Specialized Investment Funds and believes that the category lends itself to a lot of product innovation across asset classes.