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.
Create wealth by smartly managing risks
This is a regular question that I get asked at meetings with investors and mutual fund distributors. It is even more common today as markets have moved up to a record high and valuations have pushed significantly higher. This question presupposes that I have the skills to discern the risks in the market. Blessed as I am with a worrying & skeptical nature, I see risks all the time. But, the problem with risk is that the biggest and market disrupting risks are those that I cannot see. Worse they are the unknown unknowns.
