Behavioural finance is a branch of behavioural economics, which proposes that various psychological biases influence the behaviour of people towards their financial and investment decisions. People tend to behave differently to even similar news and events, and thus, behavioural investing takes into cognizance the influence of biases in the investment decisions.
OWhen chalking out a prudent financial roadmap, one may have several goals. It is always desirable to divide such financial goals into short-term and long-term. Long-term goals may include retirement planning, children's education, marriage, etc. Short-term goals may consist of maintaining an emergency fund, house renovation in the next six months, family vacation, vehicle purchase, etc. While equities are considered for long-term financial purposes, choosing the right investment option for short-term financial goals may be tricky for some investors.
The outbreak of COVID-19 is being referred to as a “once in a century event” and has heightened uncertainty for many companies which have to deal with the prospect of a significant drop in their cash flows. The longer the pandemic persists, greater the risks as leveraged businesses might find it hard to service the debt or access credit.
When it comes to investing in mutual funds, data suggests that investors are highly inclined to invest in equity funds. As per the quarterly data for July - September 2022, about 9.2 crore folios featured equity schemes across the mutual fund industry, with the total Assets Under Management (AUM) of ₹14.64 lakh crores. In comparison, the number of folios in debt-oriented schemes stood at around 72 lakh. (Source: AMFI)
On July 31, 2020, the Nifty Pharma index has hit a 52-week high levels. This no doubt gives us great satisfaction considering that the Pharmaceutical sector is the largest overweight sector position in UTI Value Opportunities Fund (the Fund). Even as many of our portfolio companies were battered by the impact of the COVID-19 pandemic, this index has bounced nearly 79% from its low in Mar-2020.
As the fund manager of UTI Value Opportunities Fund, I often wonder if it would be more palatable to many investors if we called the fund ‘UTI Opportunities Fund’ (as it was once called) because the word ‘Value’ in the name of the fund has become unappealing to some.
The 2020 edition of the Indian Premier League (IPL) is happening by around six months’ delay due to pandemic. However, a delayed event is better against a cancelled event for the cricket fans across the country, who keenly wait for the Indian Premier League (IPL) every year. Apart from the entertainment it aims to provide, the cricketing event provides several investment lessons for the investors to follow.
While retirement planning is often discussed, not many take it seriously. Since the post-retirement phase generally does not have regular cash flows, it is crucial for the investors that their financial plans consider all the eventualities. It is also essential that investors have enough investment corpus to maintain their lifestyle and take care of medical expenses post-retirement.
When planning for a child's marriage, one often tends to underestimate the amount required. It is said, "marriages are made in heaven but celebrated on Earth." It is the celebration of the formation of a new bond between two individuals and two families. Most parents wish to celebrate it lavishly, but it is equally important that one plans systematically towards such goals.
In the Ramayana; Kumbhakarna is described as having been cursed to sleep for 6 months at a time. If only we investors had the same ability. If we had fallen asleep at the end of February 2020 and then woken up at the end of August 2020, it would appear that nothing much had happened. After all the Nifty 50 closed at 11201 at the end of February 2020 and at the end of August 2020 it was only marginally changed at 11387.
