'Gold is a good long-term hedge against inflation and equity risks'

How is your team viewing the current market valuations and preparing for possible corrections?

Mid- and small-cap spaces appear overvalued, while large caps offer more comfort. We prefer stories with strong fundamentals, robust cash flows, and high-quality businesses. We prioritise resilient companies that can withstand volatility. We closely monitor key indicators affecting market dynamics and emphasise a disciplined, long-term approach with diversified funds to manage volatility. For equity-focused strategies, flexi-cap, large & mid-cap and large-cap funds provide lower volatility and better risk management.

Given the uncertain macroeconomic landscape, at Bajaj Finserv AMC, we advise investors to consult financial advisors to align portfolios with their risk tolerance and objectives.

Are index and factor-based passive funds a fad or a lasting investment strategy?

Large-cap and flexi-cap equity funds tend to outperform the broad market index in the long term. Index and factor-based funds offer low-cost, transparent ways to access diversified exposure to the market. Passive investing's appeal is rising as investors prioritise cost-efficiency and consistent returns. Factor-based strategies allow targeting specific return drivers. While active management has its place, the move to passive and factor-based investing is a long-term transformation in how people invest.

Will AI impact your business? How and why?

AI has become a strategic pillar with profound implications for the Indian AMC industry:

a) Processes vast datasets, uncovering patterns in market and client behaviour for adaptive decision-making.

b) Assesses risks and adjusts strategies in volatile markets.

c) Delivers personalised service experiences tailored to individual clients.

d) Streamlines back-office operations, minimising the risk of human errors and allowing focus on strategic initiatives/differentiators.

e) Facilitates comprehensive market research by analysing unstructured data and identifying lucrative investment opportunities.

Rapid-fire questions

• If your fund house had a superpower for investors, what would it be?
  Ensure that their behaviour optimises their returns through long-term investment.
  
• The biggest mutual fund myth you'd debunk.
  "Mutual funds matlab equity". We have outstanding fixed-income products for investors to consider.
  
• An unconventional asset class you'd add to your portfolio.
  Gold is a good long-term hedge against inflation, exchange rate and equity risks.
  
• A Bollywood movie that best represents the mutual fund industry today.
  Baahubali. A hero product that does so much good for the common people, realising its full potential.

This article was originally published on October 24, 2024.