India’s SIP champion is onto his next big idea – he says it’s time all MFDs make their clients IPO investors. There are umpteen new issues coming to the market – in the main board as well as the SME board – and most of them are getting listed at a healthy premium to offer price. With IPO cycles down now to just 3 days, there are huge opportunities for MFDs to actively track this space, recommend promising IPOs to their clients and help them earn healthy profits – which as he says can be over and above their portfolio returns.
He encourages his clients to take OD facilities against their long term MF investments for the purpose of deploying in the IPO space. He shows us how to get upto 10 applications within a family into promising IPOs. He advocates investing in the retail category which sees less oversubscription compared to the HNI category and enhance allotment chances using all the legally available names within the family to invest in IPOs.
He advocates selling within 15 minutes of listing – keep this discipline always even if an occasional loss has to be booked. The idea here is not to create an equity portfolio but to maximize rotation of money into more IPOs to generate higher RoI. With over 80% of IPOs listing at a premium, Pankaj ji says this is actually far more rewarding than F&O trading – where SEBI says less than 10% are profitable trades.
The SME board is as yet a far less explored but equally exciting opportunity for IPO investors. The stream of SME IPOs has been increasing rapidly and will increase at a greater pace – he expects over 1000SME IPOs next year – which works out to a staggering 5 IPOs per market trading day. He takes us through the safeguards that the exchanges have put in place to ensure basic quality of new issues and liquidity post listing in the SME board.
It will be well worth the time and effort for MFDs to track the IPO space, do your due diligence and recommend promising ones to your clients – great way to demonstrate advisor alpha – literally on a weekly basis– which should help immensely in gaining wallet share from clients apart from whatever brokerage you make on the IPO allotments. The big benefit for MFD shere is wallet share and referrals – IPO investing can be your next big growth driver.
Pankaj ji reiterates the advise he gave back in Aug 23 – he strongly advocates that all MFDs must be very active on all social media platforms – that’s where you will build your credibility and visibility – the two pillars to secure your growth prospects.