'We advise investors to consider hybrid funds in this phase'

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

The markets are currently slightly expensive, but that doesn't necessarily mean a crash or correction will happen immediately. In this phase, we advise investors to consider hybrid funds.

At DSP Mutual Fund, our portfolios adhere to our investment principles by focusing on high-quality businesses at fair prices. We also recommend toning down return expectations and extending holding periods to navigate this market environment effectively.

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

Passive index and factor-based funds will grow alongside active funds, much like we see in the rest of the world. The rise of passive funds will challenge us to deliver better returns than the indexes, keeping us on our toes.

Skilled active managers will continue to provide value and achieve growth, while high-quality passive funds will also experience significant expansion. Overall, both types of funds have a promising future in the investment landscape.

Will AI impact your business? How and why?

AI can be a valuable ally in all areas of our business, much like any effective technological enabler. Its capabilities can enhance our operations in several key ways, including efficient data analysis and providing deeper insights into consumer behaviour and investment opportunities. This allows us to make informed business decisions based on accurate information.

AI tools can also improve communication within teams and with customers. They can help us identify trends and opportunities, leading to more strategic outcomes.

Rapid-fire questions

• If your fund house had a superpower for investors, what would it be?
  Giving investors the power to understand fund managers and their investment philosophy instead of focusing solely on past returns. The big insight is that wealth creation is fundamentally about time. Compounding over time leads to exponential outcomes. Additionally, training investors' minds to celebrate market corrections while being cautious of euphoria in investing.
  
• The biggest mutual fund myth you'd debunk.
  Certainty of views about the future in a world that's highly unpredictable.
  
• An unconventional asset class you'd add to your portfolio.
  Good quality global companies at fair prices.
  
• A Bollywood movie that best represents the mutual fund industry today.
  Agnipath. It represents dual commitment: fund managers' responsibility and honour of managing others' hard-earned money and pledge as investors to invest for the long term across good and bad times.

This article was originally published on October 26, 2024.