'It's a myth that larger funds outperform smaller schemes'

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

Our team feels that the market trajectory and economic fundamentals have not changed, despite the recent volatility, for investors to be overly worried. We strongly believe that valuation, on its own, is never a reason for stocks to correct. Still, elevated valuations do become a catalyst when other fundamental and sentiment-related events unfold. We have always focused on ensuring that concentration and liquidity risks across our portfolios are adequately aligned with scheme objectives and investor/distributor profiles in respective schemes.

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

We feel that active, passive and factor/quant-oriented strategies might co-exist and grow together, given the varying requirements of investors in India and may help expand the investment ecosystem by increasing awareness and penetration of market-linked products.

Will AI impact your business? How and why?

AI is likely to impact almost all areas of work and lifestyle, and the mutual fund industry is no different, albeit the timelines may be more incremental rather than exponential. This is because techniques will harness technology rather than vice versa. While the range of AI applications will evolve over time, at this juncture, at Bank of India Mutual Fund, we plan to use AI to enhance the investment universe funnel, customer service, real-time risk management, operational efficiency, etc.

Rapid-fire questions

• If your fund house had a superpower for investors, what would it be?
  Be-spoke and lifecycle-based asset allocation for each folio based on A(ugmented) I(ntelligence) using an existing set of standard schemes.
• The biggest mutual fund myth you'd debunk.
  Schemes with larger AUM (assets under management) are better than smaller-sized schemes for investors or in terms of performance.
• An unconventional asset class you'd add to your portfolio.
  Sports-related collectables and antiques. They now have the same long-term capital gains treatment as most market-linked products.
• A Bollywood movie that best represents the mutual fund industry today.
  Jo Jeeta Wohi Sikandar. Performance, perseverance and people are driving strong business tailwinds for our industry vis-a-vis other retail financial products.

This article was originally published on October 25, 2024.