BT Markets Today Summit: ‘Wealth creation happens through very simple products,’ say investment experts

Slow and simple wins the race. That’s what capital market veterans at Business Today’s inaugural ‘Market Today Summit’ espoused. Given the battering of stock markets and crypto markets over the last one year, fund managers are advising retail investors to stick to the simple and the tried-and-tested. 

“A lot of people are investing in fads and overvaluing something that is exotic. But actually wealth creation happens in very simple products instead of something that is complex. The latter should be a smaller part of your portfolio,” said Pratik Oswal – Head (Passive Funds), Motilal Oswal AMC. “A lot of thematic funds around EVs, biotech, et. are interesting but wealth is being created in a broad-based fund like an S&P 500,” he added. 

Adding to Oswal’s veiled reference on crypto investments, Neil Parag Parikh, Founder and CEO, PPFAS Mutual Fund, said, “When we talk of NASDAQ, we need to differentiate between mature tech companies and new-age stocks. During the pandemic, a lot of these new-age ones without any fundamentals went up. I am not very confident about these, and there is some pain left there. However, the matured tech ones like Google, MSFT, Amazon, etc. can do well.  A 20-30 per cent fall in mature tech stocks is not uncommon.” 

The most important question though remains whether Indian retail investors should invest globally, especially in the current climate?

Oswal explained, “What investors gain by having a portfolio outside is that international markets move in very different directions than the Indian markets. That provides diversification and flexibility. If you put 15-20 per cent of your portfolio outside, stick to that investment thesis. What we are seeing is there is a lot less sensitivity to pain in today’s investor profile. Whenever they see their portfolio not doing well, they react very quickly. But success in investing depends a lot on your sensitivity to pain.”

Further batting for foreign investing, Parikh said, “The reason you go abroad is to reduce the risks more than to get great returns. A lot of opportunities in the listed space are in the US or in the foreign markets. There is no equivalent of Google or Amazon in India.”

“And equity is a long-term product and is not obsessed with the last six months’ returns,” he added.

Also Read: Market Today Summit LIVE: Be honest to yourself as an investor, says Nilesh Shah