CEO Speak September 2024

The markets continue with its upward trend as the Sensex crossed 82,500 levels*. The AUM of the Indian mutual fund industry stood at Rs 64.56 lakh Crs as on 31^st July 2024. The mutual fund space has seen a steady growth in retail investor participation with about 9.34 Crore SIP accounts as on 31^st July 2024 that has been increasing month on month. The growth momentum in the Indian economy remains strong with the government’s thrust on infrastructure spends, increased focus on employment generation and skill development. Global geopolitical and economic uncertainties continue that could affect the Indian markets as well.

There are two words that I would like to emphasise on, this month, when we are in a phase of soaring markets, yet volatility and corrections must be factored in.

Patience and Caution.

Importance of Patience in Equity investing.

I see many investors investing through SIPs into the equity markets which is a recommended and prudent way of investing. However, they tend to look at short term returns of the fund and base their decisions or panic on looking at 6 month returns or sudden market corrections. Equity is a long-term game. Patience allows investments to benefit from the power of compounding. By staying invested through various market cycles, investors can ride out temporary dips and potentially see significant growth as the market recovers and grows over time. Financial goals should be the bedrock for any investment decision, and one must be patient to stick to their investments decisions and continue with their SIPs, for instance, when your financial goal for retirement planning or a child’s education.

Caution amidst uncertainty

While patience is a crucial, caution is equally important. Investors must assess their risk tolerance and ensure that their portfolios are diversified to spread risk across different asset classes. There is a lot of available information to read and educate oneself on understanding your risk appetite and corresponding choice of investment options. One must not get swayed by the greed of possible higher returns through some sectoral funds, for instance, and ignore their asset allocation.

Caution also means avoiding market timing—an approach that often leads to poor investment outcomes. Trying to predict market highs and lows can be extremely challenging, and most investors are better off maintaining a steady investment strategy through systematic investment plans (SIPs), which mitigates the impact of market swings by investing fixed amounts over time.

Explore Opportunities but Maintain a Balance

The right balance of patience and caution is important in navigating the equity markets. While patience ensures that investors stay on course during rough patches, caution helps manage risk and avoid hasty, emotional decisions. Do explore your investment options like NFOs, sectoral funds or thematic funds as they are great ways to increase the returns on your overall portfolio but keep a check on your asset class balance and diversification. By maintaining this balance, investors can work towards long-term wealth creation without over leveraging themselves. Thematic funds provide exposure to sectors or themes with strong growth potential.

We at HSBC Mutual fund believe in the fundamentals of investing like financial goals, risk appetite and asset allocation that should be constant guiding stars for an investment journey. At the same time, we are committed to bringing the best possible options of products and services to our investors. In this endeavour, we are bringing you a new fund offering of HSBC India Export Opportunities Fund that aims to capture the growth in exports. This thematic scheme intends to invest predominantly in Equities and Equity Related Securities of companies from the sectors/industry having exports revenue more than 20 per cent from outside India.

Happy Investing!

Source: MFI Explorer, AMFI. *Data as on September 3, 2024.

Note: Views provided above are based on information in public domain and subject to change. Investors are requested to consult their financial advisor for any investment decisions.

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