LEADER SPEAK

The calendar year 2023 so far has been volatile for the Indian equity markets and relatively underperformed compared to the global markets. Range of factors seem to have had the effect on our markets- some global and some domestic. Despite concerns, some sectors like IT and Auto have done well so far in this year. Average Assets Under Management (AAUM) of Indian Mutual Fund Industry for the month of January 2023 stood at ₹ 40,80,311 crore.

Systematic Investment Plans (SIP) inflow has kept growing which strengthens the fundamental belief in the markets through regular investments and it is heartening to see the continued trust that the retail investors have been putting in the Indian Mutual Fund industry month on month.

On the debt side, the overall outlook is tilted towards expectations in further rate hikes.

As Indians we are traditionally brought up as savers and have traditionally been investing into guaranteed return products and fixed return instruments like bank deposits, post offices, company deposits, PPF etc. In recent years, several savers have realized the advantage of investments in Debt Mutual Funds for their potential for returns and tax-efficient gains compared to other traditional debt instruments. However, negative news surrounding default in debt instruments circa 2021 was a cause of worry, making them wary of Debt Funds as a category.

Target Maturity Debt Funds is like a whiff of fresh air for investors in debt funds. Target Maturity Funds are the Debt Funds that have a specified maturity date, their portfolio is aligned with the expiry date of its benchmark. Just like other debt mutual funds, Target maturity funds invest in a basket of fixed-income securities such as Government bonds, State Development Loans, and bonds issued by PSUs & high-quality Corporates depending on the composition of its benchmark index. The difference is they are passively managed i.e. they track specific fixed-income indices and invest in line with the index. These funds carry comparatively lower interest rate risk.

At HSBC Mutual Fund we strongly believe in the fundamentals of investing. Investing basis one’s financial goals, being aware of one’s risk appetite and diversifying in different asset classes. Hence while the equity markets help you in wealth generation over a longer time horizon (we recommend the SIP route), one must also have adequate investments into the debt instruments for apt diversification. Target Maturity Debt Funds aim for better risk adjusted performance and turn out to be more tax efficient compared to the traditional fixed income products in the market.

While we cannot predict the markets and we may be in for some uncertain times in the near future, our firm belief in the India growth story remains strong. So, stay invested when the markets are volatile, diversify into different asset classes and keep a sharp eye on your financial goals.

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Source: HSBC Mutual Fund, AMFI

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