'Factor-based funds will be key player in investment landscape'

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

In the last 12-18 months, the markets have expanded significantly. Indices like BSE Sensex and Nifty 50 are trading slightly above historical P/Es, while the Nifty Midcap 150 and Nifty Smallcap 250 indices are significantly above historical valuation levels. At NJ AMC, we follow a 100 per cent rule-based investment approach, focusing on high-quality businesses with high and consistent profitability, stable cash flows, regular dividends and low debt. Our flagship NJ Flexi Cap Fund,NJ Balanced Advantage Fund and NJ ELSS Tax Saver Scheme maintain high-quality portfolios while diversifying across market caps. Investing in high-quality businesses with lower volatility can help protect against market downturns. The NJ Balanced Advantage Fund adds further protection through dynamic asset allocation. That said, despite short-term market uncertainty, we believe it's ideal to have a quality-focused approach.

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

In recent years, index funds have seen significant growth in India, including factor-based index funds, which hold great potential. Globally, factor-based strategies and smart-beta investing have gained significant traction, particularly in the US, with nearly 40 per cent AUM growth in equity smart-beta ETFs since 2000 (Bloomberg Intelligence). We have embraced this trend in our investment approach and believe that proprietary factor-based mutual funds will become a key player in the investment landscape as the market moves towards a more data-centric investment approach.

Will AI impact your business? How and why?

At NJ AMC, we leverage AI to shape the future of the mutual fund industry. Our in-house 'Smart Beta Research Platform' utilises machine learning to back-test and ground our strategies in data-driven insights.

By embracing AI, we aim to improve the efficiency of our investment strategies and ensure our investors receive the best possible service in their financial journey, be it online onboarding or customer care.

Rapid-fire questions

• If your fund house had a superpower for investors, what would it be?
  Discipline and simplicity.
  
• The biggest mutual fundmyth you'd debunk.
  That investing requires a constant and hands-on management approach.
  
• An unconventional asset class you'd add to your portfolio.
  We believe any conventional or unconventional asset class with a strong potential and economic rationale to generate significant real returns shall be included in our portfolios.
  
• A Bollywood movie that best represents the mutual fund industry today.
  Chak De! India (2007).