Posted On Friday, May 26, 2017
"Sensex hits 31,000 for the first time, Nifty nears 9600!" scream news headlines at the time of writing this article. For people tracking the stock markets, this is heaven, with markets touching new highs almost every other day.
Indeed, the stock markets have had a sharp upward spike recently. Have industry spends numbers hit an all-time high? Are we going to see a slew of factories or ports or power plants opening up across India? Is the IT sector brimming with health and a strong order book? Are the main drivers behind this rally hard numbers or speculation?
We don't wish to sound unnecessarily pessimistic by putting this across, but we hope that that investors will be prepared to do what is best for them. Knowing the rationale behind a significant rise (or fall), knowing that a correction was due, and basically knowing that volatility is the essence of markets will help you score well as an investor.
Be market neutral, ignore market levels
That's why we would endorse a "market neutral" investment approach for investors. Where investors do not sway to market movements - flee with all they invested when markets seem to be falling and run in to try and capture gains when they are rising, like they are right now.
Because nobody is good at predicting market moves. Investors tend to exit when they should enter and enter when it's better to tread cautiously. However every tempered investor knows that over a long period of time equities have shown themselves to be among the top avenues to create wealth. So such tempered investors would be unfazed by the little disturbances that come midway. They would focus on asset allocation and stick to their investment plans.
We're not worried about the markets
At Quantum AMC, if you have been following our newsletters, the message put across by the fund managers of Quantum Long Term Equity Fund has been constant: we are market neutral when it comes to managing our investors' portfolio. We, like the rest of the world, don't know whether the market will go up or down tomorrow, and honestly it does not matter, as our portfolio selection has nothing to do with market timing and the khabar floating around. It is only meaningless noise and doesn't add value. However what they actively monitor is the valuation of stocks. When one of the stocks in their radar hits the buy/sell level, it would be executed regardless of if it was the day the markets hit their all-time high.
Markets work on mass psychology patterns, and in the short term they could defy ground realities. In our view this is what we have witnessed in this rally. Therefore cash levels in equity schemes will continue showing an upward trend as the fund management team's research still indicates expensive valuations.
But this does not scare us. We witnessed a similar situation in the initial years when we had just launched the Asset Management business. The markets, according to our research, were overvalued and our flagship fund would underperform... until the time correction occurred, and then the fund took off! The same thing happened with the initial Modi wave in 2014, followed by the markets crashing.
So we would stick to our guns and wait, until either a correction occurs or our valuations outlook warrants a dramatic revision. In the meanwhile we would, of course, be looking out for buying opportunities that could emerge even in this present scenario. Because we firmly believe in the long term growth story of India.
We'd advise you to do the same. Stick to your guns, stick to your equity investments and asset allocation . Don't fret over fluctuating market levels. Think long term and remain focused on your financial goals.
If you do this, stock markets taking off like ISRO launched rockets won't make you feel like you're missing the buzz. You'd not lose sleep at night, in knowing that these upward (and downward) swings are unlikely to shake your long term investments. You'd have laid the foundation for a solid fortune in the long term future when you have invested with Quantum Mutual Fund. Do consult your financial adviser for investments related matters.
|Name of the Scheme
|This product is suitable for investors who are seeking*
|Quantum Long Term Equity Fund
(An open-ended equity scheme)
|• Long term capital appreciation
• Investments in equity and equity related securities of companies in S&P BSE 200 index
Investors understand that their principal will be at Moderately High Risk
* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
The views expressed here in this article are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.
Mutual fund investments are subject to market risks read all scheme related documents carefully.
Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.
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