On the lessons from 2009: In October 2008, nobody was willing to touch equities when they were available at great values. Now, with the markets returning to some normalcy, investors have come back.
Last year was an aberration and a once in a lifetime experience. What it taught investors was to stick to one’s asset allocation. The investors who did this were able take advantage of the market rallying from the levels of 8,000 to 17,000. Most people sold equities in 2008 and bought in 2009, whereas they should have done just the reverse. This highlights the need to have a qualified adviser with some amount of experience, who could have guided investors through the crisis.
On what investors should have done during the period of panic: During this time, it was imperative for investors to continue with their SIPs. If they had done this, they could have purchased at far lower prices and averaged out their overall costs. Also, it is probably better to opt for dividend payouts. It works as an automatic profit booking strategy.
On how the prohibition of indicative portfolio and yields affects investors: Retail investors will not know what they are getting into, but it has been done with the intention to safeguard their interests.
On regulations for the mutual fund industry: These have always been on the stricter side for the industry, which is one of the most regulated in the country. Sebi has been proactive in protecting the interests of investors. It was after the dotcom bust that Sebi introduced restrictions of up to 10% for a single stock and a limited exposure to certain sectors. The KYC norms will also benefit investors over the long term since the entire financial space would soon have to comply.
Copyright©2022 Living Media India Limited. For reprint rights: Syndications Today