Equity and debt allocations are extremely personalised in one’s life based on their life stage and many other variables. In an interview with MintGenie, Keval Bhanushali, Co-founder and CEO at 1 Finance Private Limited opines that blanket advice regarding asset allocations must be avoided.
Edited Excerpts:
Gold and silver are deemed essential hedges to inflation. However, the prices of both have tumbled down considerably in the past few weeks. Do you still investing in them to shield against the tumbling value of equities?
I have a bullish view on gold in particular for a very specific reason, the current fiat currency system should and will undergo some drastic changes in this decade which will pave way for the new world order. Given such a scenario gold is not just a hedge for me but an active asset in my allocation strategy.
Many people buy ULIPs to gain from both insurance and investments. Do you also endorse the same?
This is as wrong as it gets, I have had friends from the ULIP industry trying to explain to me the benefits of equity-linked insurance schemes with very low management charges. However, the fund performance of these ULIPs is absolutely dismal. An investor should always keep insurance and investment as two separate strategies. We at 1 Finance will be addressing the whole mis-selling piece in insurance as our first mission, many times even the sellers are unaware of the implications of such a sales-driven approach. there are some heart-wrenching cases that we have seen, we shall bring them to light soon.
There are new merger & acquisition deals in every insurance sector. Will this result in new products & relaxed norms for the insurance customers?
Insurance is one of the most recent categories where we are seeing disruptions globally and in India. with increased health and personalised data, there are some excellent products that are being built. We will soon be seeing products in motor that price your premium based on your driving habits & health based on your exercise & diet patterns. exciting times for insurance ahead, but this will also mean only the best would stay in the game and hence we expect weaker players to exit in the near future.
The decoupling theory is now extinct. The Indian stock markets have fallen like the global markets. Do you think the constant repo rate hikes will do us any good in the near future?
This may be partially correct, if you look we have done amazingly well in the developing countries stack. like I said a lot will change at the macroeconomic levels, something like India’s rating still being lower than that of the UK, Greece & many other European countries will have to change to make the global economic canvas a level playing field. We have already embarked on the journey I feel.
Equities are in red. Do you advise shifting to debt funds now?
I don't think equity and debt are too indifferent to each other, because if the overall corporate earnings will be hurt there will be a higher risk of their debt as well. Most debt MFs have the same 50 commercial papers in their portfolio in which their equity funds are also invested. These allocations are extremely personalised in one's life based on their life stage and many other variables. from a 15-year perspective I will continue to be in equity but if I am retiring in the next five years I should have a completely opposite allocation. hence such blanket advice should be avoided.
Almost all sectors are underperforming. Which sectors do you still recommend to investors looking to gain during this recession?
We see a revival in the IT sector in India, also automobiles are one sector where India can outshine globally. Despite the popular belief, India is still at eight per cent in terms of four-wheeler penetration, with the rising income standards and aspirations of the Indian affluent class, I see this sector being positive from here.
