The longest-serving mutual fund manager at HDFC Mutual Fund has a long history of dabbling in equities. His initial experience at SBI Mutual Fund and subsequent career at HDFC AMC propelled his position to an enviable level. Prashant Jain was the country’s first fund manager who was given the charge to manage an impressive AUM of ₹1 lakh crores worth of equity assets.
Jain quit HDFC AMC post a 19-year stint. As of June 2022, he used to manage Balanced Advantage, Flexi Cap and Top 100 funds at HDFC MF apart from a dedicated scheme under an exclusive mandate from a sovereign wealth fund.
Nothing short of a legend in the mutual fund industry, Jain shares some simple strategies that he wants people to follow. Dubbed Peter Lynch in India’s mutual fund spectre, Jain’s incredible 20%+ returns in the past couple of decades have helped many investors get rich.
People see the markets falling and sense a crisis. They do not realise that it is the reality of the market. The bottom line is that it is impossible to time the market in the short term. No matter how huge the fall is, the market will eventually bounce back and rise to greater heights. What matters is your asset allocation and how long you are willing to hold on to your investments. Right asset allocation and an increased holding capacity to create wealth from equities.
Never borrow to invest
This is one important lesson for those who invested after borrowing or those who traded in future and options (F&O). If they are not able to earn within the stipulated period or lose out on the margin, they will lose more. Not only will they be burdened with the amount of the loan but also will also have to pay the margin amount along with the loan interest. This translates to more losses in the long run. The learning lesson is that you must invest within your capacity and not ignore your risk appetite while choosing your investments.
Good opportunities exist
Geopolitical tensions and global events have caused the stock markets to crash, be it the 9/11 incident or the Lehman crisis that caused the markets to sink. These incidents cause tempering in the markets. However, they do not have a prolonged and permanent effect on the Indian markets.
Also, the markets in India are less expensive. Investing in stocks during such a dire selling stock allows you to make profits during the bull run. You must rely on your wisdom to decide when to buy and when to sell. Pay attention to valuation. You must consider putting your money in highly valued shares only when you have an extreme risk-taking capacity, else hold on to what you have.
Not all market falls are the same
The market fell in 2008 and then again in 2020. The extent of fall in each was different, yet investors compare these stock market crashes to gauge how far can the market go down. Some hard crashes are due to expensive market valuations; others are triggered by global tensions and investors’ fear. Once you know what triggered the crash, you will realize how to deal with it eventually.
Jain had an unwavering faith in his decisions. Irrespective of the noise around him, he stuck to his guns. The end result was for everyone to see, as investors gained from his zen-like patience. His ability to do nothing even when all advisors clamoured to shuffle their portfolios and then use his experience to tweak his portfolio only when needed underscored his mettle and ability to withstand pressure. He came and left with a lot of goodwill that future fund managers will find hard to earn.