- Multi cap funds rally to continue in 2024?
- Strong returns for thematic funds
- Time to buy debt funds?
Niraj Shah in conversation with Infinity Advisors' Ruchi Sankhe and Plan Ahead Wealth Advisors' Vishal Dhawan on 'The Mutual Fund Show'. #NDTVProfitLive
- Strong returns for thematic funds
- Time to buy debt funds?
Niraj Shah in conversation with Infinity Advisors' Ruchi Sankhe and Plan Ahead Wealth Advisors' Vishal Dhawan on 'The Mutual Fund Show'. #NDTVProfitLive
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01:20 Hello, and welcome to the Mutual Fund Show.
01:23 I'm Neeraj Shah.
01:23 The next 25 minutes, we'll talk about MFs,
01:27 but with an idea of what could one do in 2024.
01:29 Now, 2023, viewers, was unequivocally
01:33 in favor of equity mutual funds.
01:35 And I'll tell you why.
01:36 One, the returns that some of these funds
01:38 gave, whether value funds, thematic funds,
01:40 or multi-cap funds.
01:41 Two, even in terms of inflows, cumulative inflows
01:44 into equity mutual funds far outstripped that into debt.
01:48 Now, you could argue that's probably
01:50 an annual phenomenon that might repeat every single year,
01:52 but be that as it may, for 2023, that was certainly the case.
01:56 The question to our two experts on the show
01:57 today is that after such a banner year,
02:00 particularly for the broader end of the spectrum,
02:02 and therefore those kind of funds,
02:04 and in fact, some funds underperformed the index
02:06 as well, what could be expected in 2024 for somebody
02:10 who wants to construct or reconstruct
02:12 her or his mutual fund portfolio?
02:15 To talk about that, Ruchi Sankhe,
02:17 Investment Advisor at Infinity Investment Advisors,
02:19 and Vishal Dhawan, Founder and CEO of Plan Ahead Wealth
02:22 Advisors with me on the show.
02:24 Both of you, thank you so much for taking the time out
02:26 and being with us.
02:27 And at the outset, happy new year to both of you.
02:29 Happy new year to you, too.
02:30 Happy new year to you, too.
02:31 Thank you so much.
02:31 Ruchi, I'll start with you.
02:34 Great year.
02:34 Let's start off with the equity funds,
02:36 because let's bifurcate it to equity debt,
02:38 and then the other asset classes as well.
02:40 Great year for people who invested into equities
02:43 through funds.
02:46 What should one do to maximize equity fund returns in 2024
02:51 or over the next 24 months?
02:53 OK.
02:55 I want to start a little bit with what's
02:57 happening on the macro level and how
03:00 you should construct your portfolio going forward,
03:03 because that will decide whether equity or debt or hybrids,
03:07 what makes sense.
03:09 So obviously, everybody's talking about the global
03:11 interest rates coming off, and that's going to have an impact
03:14 on India as well.
03:15 And we see that tapering starting
03:17 to happen perhaps in the second half of the coming year.
03:21 With Fed, you will start seeing probably 25 to 50 basis points
03:24 reduction, and then you will also
03:26 start seeing something following the lead here in India as well.
03:31 With that happening today where we stand, in fact,
03:34 interest rates are probably at the highest level.
03:36 And we do want to construct.
03:38 We want to take advantage of that from the debt side.
03:40 And from a debt side, I would construct
03:43 a portfolio which would probably be a little bit more longer
03:45 tenor on the G-Sec side.
03:47 And those would be the funds to play with today on the debt
03:51 side.
03:52 On the equity side, we've had a bumper year so far.
03:55 And while caution is always advised when you come out
03:59 of such a great year--
04:00 I mean, you would have seen that the small cap index is up
04:03 by almost 56% and mid caps are up by 47%.
04:08 In fact, even the regular index, Sensex and Nifty
04:10 are up between 20% to 24%.
04:12 So we've had a very strong year.
04:15 By coming on the back of such a year,
04:17 you do expect muted returns.
04:18 But having said that, India is still very strongly positioned
04:22 as we go forward.
04:23 And I would not go too underweight on equities
04:25 even from here onwards.
04:27 I do see the election year.
04:29 In fact, now the outcomes are becoming
04:31 more and more predictable in what
04:32 might happen on the elections going forward.
04:35 Having said that, and also the economy--
04:37 in fact, JP Morgan recently released a report
04:40 which said that they expect the GDP growth to be almost 7%
04:43 for this year, which is reasonably strong when you
04:45 consider the global environment.
04:47 And even US are currently at 2% projections.
04:50 So you would continue to see flows coming
04:53 into India on the equity side.
04:55 The balance sheets are reasonably
04:56 strong of the companies.
04:58 There is lower leverage.
05:00 We have seen interest in the services sector so far.
05:04 We might see on the back of elections happening this year
05:07 fiscally-induced CapEx kind of investments.
05:10 So you will probably see those kind of investments going in.
05:13 And that's why equity might still
05:15 continue to perform this year.
05:16 And I wouldn't go too underweight on equity.
05:20 So equity funds make sense.
05:22 You could construct your portfolio
05:23 with some balanced or hybrid funds, which
05:26 will give you an access to debt as well as equity.
05:29 But I wouldn't say that let's go underweight on equity funds
05:32 and just strongly go overweight on debt, which
05:36 is what the common refrain is today on the street,
05:39 saying debt you can see predictable returns.
05:41 And equity is coming off a very strong year.
05:42 So you probably will not see such strong returns.
05:45 So I'm of the view that you would probably
05:47 go a little bit underweight because you may not get the 20%
05:50 returns that you've seen last year,
05:52 but still continue to build a equity
05:54 portfolio with slight underallocation
05:57 and also go stronger on the debt funds.
05:59 So that's how I would construct the portfolio.
06:02 And also look at some alternates as we go forward.
06:05 Alternates also make sense.
06:07 Today REITs are between 5% to 7%.
06:09 InVIDs and REITs are giving those kind of returns.
06:11 And if the interest rates start to come off,
06:13 you'll start seeing capital depreciation there also.
06:16 Those are alternates to the listed equity funds as well.
06:19 So those are the things that I would
06:21 use to construct a portfolio as we go forward
06:23 with some allocation even to commodities like gold
06:27 as we go forward.
06:28 So that's how I would construct the portfolio.
06:30 OK, and we'll try and remit the conversation on this show
06:34 at least to how to do it via the fund route.
06:36 So if the mutual fund route allows us, great.
06:39 Otherwise, we'll kind of give it a pass.
06:41 A lot of viewers tune in, especially
06:43 to get advice purely from a fund perspective.
06:46 But the point is well taken.
06:47 Thankfully, Ruchi, out here the markets team
06:50 has not kind of gone out and heard too much about going
06:53 underweight equities.
06:54 If anything, everybody's saying it's still probably a year
06:57 to reckon with when it comes to equities.
06:59 Vishal, just wondering, when you are thinking
07:02 of what to tell clients about how the mutual fund
07:07 allocation in 2024 should be, is it still largely equities?
07:10 Or do you believe the predictability of debt,
07:13 particularly both global and local rates coming off
07:17 might help that debt portfolios?
07:19 Is that making a larger presence than 2023?
07:22 Most certainly.
07:23 I think we do think that at least as of now,
07:27 because the risk obviously at the start of every year
07:29 is things can look very different a few months
07:32 down the line.
07:32 Always does.
07:33 Always does, right?
07:34 So I think very clearly interest rate movements do
07:37 seem to be trending downwards.
07:40 Even oil prices, which was a big concern that
07:42 existed a year back because of the big supply coming out
07:45 of the US, seems to have handled itself really well.
07:50 And therefore, you do think that fixed income
07:52 could be a good place to be in.
07:54 You could obviously look at some amount of accrual
07:56 through short-term funds.
07:58 And then, of course, some amount of duration coming in as well.
08:02 And clearly, there is now the option
08:03 for you to buy into international funds doing debt
08:05 as well.
08:06 And therefore, there could be a little bit of a play
08:08 to try to lock into some of those yields overseas as well.
08:13 And then maybe get some additional arbitrage
08:15 to the rupee depreciation that traditionally
08:18 happens against the US dollar.
08:20 So clearly, fixed income is a good place.
08:24 Equities is good, but I think expectations of returns
08:29 need to be much lower than what they were in 2023.
08:33 Clearly, there's a lot of excitement
08:36 around small and mid-caps.
08:38 The flows into mutual funds are seeming to show that.
08:40 I think that's an area where people
08:42 need to be really careful.
08:43 You spoke about multi-cap funds outperforming.
08:45 Very clearly, a large portion of that outperformance
08:48 is coming from just the structure of those funds
08:50 needing to have at least 50% of the allocation
08:53 between those two.
08:54 And of course, they can go even higher.
08:57 So I think the way we need to look at equities
08:59 is be a little careful.
09:02 That doesn't mean you make it zero, but be careful.
09:05 And don't forget that in 2023, equities
09:09 did well all over the world.
09:10 US markets did really well.
09:12 Japan did really well.
09:13 So when you look at India in the context of what
09:16 happened in the globe in 2023, India
09:18 is actually a little bit of a middler
09:21 in terms of performance.
09:22 So I think you need to look at 2024 clearly as a year where
09:25 you allocate two equity funds in India,
09:28 equity funds internationally, some international debt,
09:31 some India debt, and of course, gold,
09:34 because traditionally gold has done well when
09:36 its rates start to peak out.
09:38 Simply put, I don't think the message coming out here
09:42 is that go underweight equities.
09:43 If anything, both of them are saying,
09:45 which in particular, that it's not the time
09:47 to go underweight equities.
09:48 But balance it out maybe, because if you
09:51 expect the returns that came in 2023,
09:53 especially at the SMIDS end, which is the small and mid caps,
09:56 there, who knows, there might be a bit of a disappointment.
09:59 So difficult to predict that.
10:00 Now, I'll try and break this up into funds that have done well,
10:05 because there's a bit of a recency bias in the minds
10:07 of investors, just to try and understand
10:09 what would you do with some of these which have done so well.
10:12 Because like it or not, people unfortunately
10:14 sought mutual fund returns by the last one year, three years,
10:18 look at the best performers, and then tend to invest.
10:21 So I just want to get that bogey out of the way.
10:23 First up, Vishal, to you, the top four gainers in 2024,
10:27 when I looked at equity mutual funds, were value funds.
10:31 Now, yes, value has made a comeback versus growth,
10:33 say for the US, which is a different kettle of fish
10:35 altogether.
10:36 But we've seen value make a comeback.
10:39 Is it safe to say that because the markets are so expensive
10:42 and there might be a hunt for value,
10:43 that you might still see value funds do well,
10:45 or not necessarily the case?
10:46 What would you do with your client's money,
10:50 existing or potential, into value funds?
10:53 So I think, again, as a style, it's a very broad style.
10:56 I think one needs to go one layer below that,
10:59 and actually look at composition of those mutual fund
11:02 portfolios, and try to segregate out
11:04 how much of that return has come from a certain market
11:07 capitalization in the marketplace.
11:09 So for example, if the value fund's done really well
11:12 because it has a large, small, and mid-cap tilt,
11:16 or a significant small and mid-cap tilt,
11:19 then I think you need to be a little careful,
11:21 because everything in that space is probably expensive.
11:25 But we clearly think that value funds that
11:27 are large-cap oriented, even though they have flexibility
11:31 to go where they want, are a good choice,
11:34 and continue to be a good choice.
11:35 Because we do believe that when valuations are excessive,
11:40 trying to get into value funds is a good strategy,
11:43 even if it just controls downside risk at certain points.
11:46 And then when recoveries happen, because the stocks
11:49 that they held were not that expensive,
11:51 you tend to do better because you fell less.
11:54 So we clearly think value is a good place to go to,
11:57 but look at the portfolio carefully,
11:58 and try to figure out whether returns came
12:00 from small and mid-cap or not.
12:02 - Okay, so not asking for recommendations here, right?
12:05 But if people want, because not too many people
12:07 will have the ability, or maybe even the time, right?
12:11 At times, and people should have, therefore,
12:13 an advisor or a portfolio manager to do this, Vishal.
12:15 But what funds would fit this bill?
12:17 Where the exposure to these is not very large.
12:20 - Yeah, so I think, you know, with the way information's
12:24 now available on the internet, just getting
12:27 market capitalization-based portfolio breakups
12:31 is quite simple.
12:32 So try to look for places where you have anywhere
12:35 between 75 to 90% in large caps.
12:39 I think anything which is 10 to 25% in mid and small caps
12:43 probably is fine.
12:45 But that's the simplistic way to actually break it up
12:48 and look at what and where to allocate money to
12:51 as far as value funds are concerned.
12:53 - Okay, Ruchi, you agree?
12:55 - You know, I-- - You may disagree,
12:55 by the way.
12:56 - No, so I will tell you, I have a different sort of flavor
12:59 to this.
13:00 You know, it's obvious, it's evident that value funds
13:03 will do well when you come through an interest rate
13:06 environment which is very high, because whenever
13:08 interest rates are high, value does better than growth,
13:11 because, you know, growth funds, and that's what you've seen
13:13 actually globally, not just in India, but even globally
13:16 you've seen value funds doing better.
13:19 And that might continue because interest rates coming off
13:22 is probably a phenomena happening in the second--
13:24 - Second half.
13:25 - Yeah, second half of the year.
13:26 So I would look at saying that, hey, don't get out,
13:30 it's not that the story's over for value as yet.
13:32 Value will probably continue to do well, so have a blend
13:36 which is more balanced between value and growth.
13:39 And those, that, so I would still have some value funds
13:42 and I would add some growth funds as well.
13:45 So you don't need to do it in the same fund,
13:47 you could actually do different funds for growth
13:49 and different for value, and then kind of create
13:51 a portfolio which is more balanced and diversified,
13:53 because in my view, value will still perform this year.
13:57 So that's my view, saying that I wouldn't necessarily
14:00 only look at the market capitalization,
14:01 because there are different ways to look at that.
14:03 I would look at what is the construct in terms of value fund
14:07 and, you know, growth, and look at that,
14:09 and I would actually not look at market capitalization
14:12 when I'm looking at this.
14:13 So a little bit different view than Vishal,
14:14 because I would say that, hey, let's look at investing
14:18 in pure value funds and pure growth funds
14:20 and creating a diversified portfolio for both.
14:22 - Okay, a viewer is listening to you right now, Ruchi,
14:25 she wants to know how does she do it?
14:27 You've been doing it, how does she do it?
14:30 What would you say?
14:31 This analyzing.
14:33 - Analyzing, yeah, I mean, you know, basically,
14:35 you look at the P's of the funds,
14:37 you see there are certain funds which actually
14:39 are positioned as value funds.
14:41 You know, without taking names, but many funds--
14:44 - We love names, by the way.
14:44 There's no recommendations, but I'm just saying, yeah.
14:47 - So let's say an ICICI Pro Discovery Fund is a value fund.
14:50 So you know that you can incorporate that
14:52 as a value fund in your portfolio.
14:54 You could have growth funds, which will be, you know,
14:56 specifically registered as growth funds,
14:58 which are looking at, you know, larger cap, mid cap,
15:00 small cap names, but which are looking at higher trajectory
15:03 in terms of growth versus value.
15:04 So, you know, you would have a blend
15:06 of an ICICI Discovery Value Fund,
15:08 which is one fund that, you know,
15:10 you could incorporate in your portfolio,
15:11 as well as some growth funds.
15:12 And that's how you would construct
15:14 the portfolio for an investor.
15:16 - Okay.
15:17 Stay on, we'll have to slip into a very quick break.
15:20 On the other side of the break,
15:21 we'll try and talk about some other options around equities.
15:25 We spoil for equities, we love equities,
15:27 but also talk about the debt part,
15:28 because both of you referred to that.
15:30 So stay on, both of you.
15:32 Viewers, we'll take a very quick break.
15:33 Be right back.
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18:34 - Back with the Mutual Fund Show and NDTV Profit
18:41 in conversation with Ruchi Sankhe and Vishal Dhawan.
18:44 Now, this segment, Vishal, I'll start with you.
18:47 And multi-cap funds made their presence felt and how.
18:52 For all the big bags that they got about how
18:55 if you know fixated 50% allocation to mid caps
18:59 and small caps, and so many people saying that,
19:01 I wouldn't want to do that.
19:01 I'll do a large cap, mid cap, small cap fund separately.
19:04 But the funds did well.
19:06 Now for somebody who doesn't have the time,
19:07 she's listening in right now and wants to understand
19:09 that after such a banner year, when everybody's saying
19:12 that large caps is the place to be in,
19:14 are multi-cap funds still viable?
19:17 What would you say?
19:18 - So they certainly are.
19:19 I think there's a segment of people
19:21 who just don't have the ability to identify a whole bunch
19:24 of different funds and are looking for a single solution
19:27 to be able to get, you know, different market cap access
19:30 and still give the fund manager a little bit of flexibility
19:33 because that 25%, large cap, 25%, mid cap, 25%, small cap
19:38 can be supplemented with the balance 25% going
19:41 wherever the fund manager wants.
19:43 So that little bit of space is there,
19:45 but I think you need to be very mindful
19:47 that the reason why multi-cap funds have done so well
19:51 as compared to other categories in '23
19:53 is there's a very large outperformance
19:56 of mid and small caps this year.
19:58 That difference is as much as about 30%.
20:01 And obviously if you have a very large outperformance,
20:04 any fund which has at least 50% in mid and small cap
20:07 is likely to show better outcomes
20:09 than something which doesn't have it.
20:12 And I think therefore you need to have
20:14 a very clearly longer term horizon
20:16 if you want to make money,
20:18 if you want to go into a multi-cap fund
20:19 because there will be periods
20:21 where you will either get no return
20:22 from the mid and small cap segment
20:24 or you will actually have the risk
20:27 of that mid and small cap segment
20:29 giving away some of its gains.
20:31 Because clearly as you look at data right now,
20:33 earnings estimates for mid and small caps
20:36 are set at between 28 and 32%.
20:39 And therefore there isn't a lot of options
20:42 to really get it wrong.
20:46 Even if you do 20%, you're still in a bad place.
20:49 So I think if you want to buy multi-cap funds,
20:52 make sure that you're there
20:54 for at least a five to 10 year investment horizon.
20:56 Don't buy a multi-cap fund
20:57 on the back of what happened last year
20:59 and expect that to repeat out
21:02 in the next 12 or 24 months
21:04 because you are buying into it with some amount of risk
21:07 or alternatively build it as a core part
21:09 of your SIP portfolio.
21:10 Saying that I don't really care,
21:12 things will go up and down
21:13 and I'm just buying long term.
21:15 - So again, not recommendations,
21:16 but I don't know if you're a liberty,
21:17 the one or two funds where things might be on,
21:19 they might not be the only ones,
21:20 it's not an exhaustive list,
21:21 but where is it that wherein you believe
21:24 that your clients are safe putting in
21:26 a long term SIP in the multi-cap category?
21:28 - So you could look at something like Nippon, for example,
21:30 which has done fairly well.
21:31 We do of course, as an advisor,
21:36 prefer certain other categories in this environment,
21:39 like FlexiCap, which can take away
21:42 that forced sort of requirement
21:45 to allocate to mid and small cap.
21:48 And that's a space where there are,
21:51 again, lots of good players, Parag Parekh, HDFC,
21:54 I mean, some of those have done really well.
21:56 But clearly, if you had to go to multi-cap saying,
21:59 I wanna go there,
22:00 I'm okay with small and mid-cap allocations,
22:02 then just ensure that you have
22:04 a longer term investment horizon.
22:05 It just doesn't surprise me that the name of PPFS
22:08 comes up every single show, every single year,
22:11 as a FlexiCap recommendation,
22:12 just somehow they've been able to do so well.
22:14 Which is the other category,
22:17 and we'll move places because I want to cover
22:19 as much as we can, is thematic funds.
22:23 Now, obviously in a rising market,
22:25 thematic funds would do well,
22:27 because there's a team which will obviously
22:28 do much better than the benchmarks, right?
22:30 So it's a given.
22:31 Can a similar thing happen in 2024,
22:34 wherein certain thematic funds could do well?
22:35 And if so, do you have a handle on what categories
22:38 or what teams could actually do well?
22:40 What is it that you might be recommending to your clients?
22:42 - Right.
22:43 Personally, I don't recommend thematic funds,
22:46 but I know that there are certain teams
22:50 that are positioned to do well as we go forward,
22:53 and there are a lot of market participants
22:56 who are sort of presenting some of these themes.
22:59 So healthcare is being one of those funds,
23:01 consumer, IT, a lot of these funds,
23:04 which are sector-based funds, are being recommended.
23:06 Personally, I feel that you can't really time your entry
23:10 in and exit out of a sector.
23:12 And if a sector is doing well,
23:14 then you could actually play it out
23:16 not just by being focused in that sector,
23:18 but maybe having a concentrated strategy,
23:20 which will be outside the mutual fund route, right?
23:24 So I would steer clear of thematic funds,
23:28 but having said that, these are the teams
23:30 that are positioned to do well,
23:32 and if one is looking at making an investment,
23:35 then one could look at IT or healthcare
23:37 or consumer thematic funds.
23:40 - Uh-huh, okay.
23:41 In which case, Vishal, can I just quickly get you in?
23:43 I mean, when I look at last year, for example, a PSU fund,
23:48 in fact, the top three performers seem to be
23:50 a PSU Equity, PSU Equity, and a PAR and Infra,
23:53 which would have a large flair of PSUs as well.
23:55 That seemed to dominate.
23:57 Are you guys recommending thematic funds,
24:00 or you are avoiding them as well?
24:01 - So we also avoid them.
24:02 - Avoiding them, okay.
24:02 - But clearly, I think you're seeing that
24:05 strong performance of PSUs show itself up in various places.
24:09 So whether you look at infrastructure,
24:10 whether you look at defense, I mean,
24:14 a lot of these spaces have gained
24:15 because PSUs have done as well as they have.
24:17 But clearly, we think that being a little more defensive
24:20 on thematics may be a good idea for 2024.
24:23 So, for example, pharma might be a better place
24:27 as compared to the more aggressive sort of teams
24:30 built on CapEx and a lot of other places.
24:33 - But viewers, remember, if you want to get into thematics,
24:35 and a lot of you are newer into the markets,
24:38 please know that the risk horizon has to be higher.
24:40 Maybe even the time horizon has to be higher
24:42 because the theme may not necessarily play out
24:45 within a calendar year.
24:46 So just keep that at the back of the mind.
24:48 Now, to debt funds as well.
24:50 And Ruchi, can I come to you?
24:52 I heard you say at the start of the show
24:54 that you are inclined to debt funds,
24:56 but with a certain duration in mind.
24:57 Can you tell us, again, for our viewers
25:00 listening to you right now,
25:01 she wants to know how does she get into debt funds,
25:03 what kind of funds with the time horizon that she may have?
25:06 Let's assume she's an average risk investor,
25:08 average age investor with an average income profile.
25:11 What would you recommend?
25:12 - Yeah, I mean, so I would again have a mix
25:15 of short duration as well as medium duration funds.
25:18 While I would say that increasing duration today
25:22 makes sense, but you do need to have
25:24 a core portfolio as well.
25:25 So it can't be just, so corporate debt funds
25:27 are a good, G-Sec funds are a good area to be in.
25:31 And I would kind of balance it across different funds.
25:35 So that's how I would construct the portfolio.
25:38 - Okay, could you just explain this?
25:39 I mean, what kind of returns can be anticipated this?
25:41 And when you talk about, for the uninitiated,
25:43 when you talk about the shorter duration, longer duration,
25:46 what would it mean?
25:47 Do they have to time it to the investment horizon
25:49 that they have in mind or to the horizon of the paper
25:52 that the fund is holding?
25:53 Can you just tell a bit about that?
25:54 - So I mean, when I say, so basically duration,
25:56 meaning the way it's constructed,
25:57 the papers that are constructed,
25:58 the average maturity should be between
26:00 two to three years, right?
26:01 I mean, so that's how you would create
26:03 a shorter duration fund.
26:04 And longer duration funds, the average maturity
26:08 would be such that when you compute the duration basis,
26:11 the maturity of the papers that they're holding,
26:14 they could have six, seven year paper,
26:16 they could have three or four year paper,
26:18 the average duration then comes to
26:19 between four to five years.
26:21 So that's how you would create the portfolio
26:24 of the fund manager would create a portfolio.
26:26 So when I say duration, duration is effectively
26:30 computing the maturities of the underlying,
26:33 you know, bond securities that they're holding
26:35 and averaging that out to say that
26:37 between four to five years,
26:39 it would be a right duration to be at this point of time,
26:42 basis how I'm looking at the markets
26:44 and how interest rates are sort of moving
26:47 as they move ahead, how interest rates will fall
26:49 over the next one or two years.
26:51 So that's what I was, you know, that's my--
26:53 - So that's a difficult task for an average investor,
26:56 better to have a portfolio advisor in such a case?
26:59 - Yes, it's always good to have a portfolio advisor
27:02 who could, you know, suggest what kind of funds to invest in
27:05 and you know, what kind of an allocation
27:07 to have across these funds.
27:08 - Got it, okay, thanks.
27:09 The final piece and we have about 60 seconds left
27:12 on the show, but I had heard you say that
27:14 international debt could also be an option
27:16 via the Indian Mutual Fund route.
27:18 Quickly, can you talk about that 60 seconds?
27:20 - Yeah, so again, assuming that interest rates
27:22 start to head down somewhere next year,
27:25 we've already seen the start of it happen in the US.
27:28 Assuming that they continue that journey,
27:30 you will see possibly two things
27:32 that you can take advantage of.
27:33 One is, of course, just interest rates coming down
27:36 and you now have at least three or four different funds
27:39 that you can take advantage of.
27:41 And they also have different durations.
27:43 So there are very short-term international debt funds,
27:46 there are some which are sort of more medium duration.
27:48 So you can choose to go to a combination of both of them
27:51 because this is not something that you may have used
27:54 in the past, but it's got lots of usage,
27:56 especially with Indian investors now spending overseas
28:00 as well, education for children, travel,
28:03 lots of those things have now come into play.
28:05 And the second piece continues to be that
28:07 over long periods of time, the rupee does tend to depreciate.
28:10 So what you're trying to do is trying to leverage
28:12 both the fact that interest rates could come down
28:15 and secondly, rupee depreciation tends to be
28:19 most often the case which ends up happening.
28:22 So look at some of that, it's an interesting opportunity,
28:26 lots of options available.
28:27 But again, it needs to be core in your portfolio.
28:30 You can't just say that, you know what,
28:32 I'm waiting for the interest rates to fall
28:33 by 50, 75 basis points, let them fall,
28:37 and then I will just exit and move back into something else.
28:39 I think it needs to become core.
28:41 - Got it, okay.
28:42 Well, both of you, thank you so much
28:43 for taking the time out and being with us.
28:45 And once again, to you and your teams and families,
28:47 very happy 2024.
28:48 - Same to you. - Thank you so much.
28:49 - Thank you so much. - Same to you.
28:50 - And viewers, thanks for tuning in
28:51 to this leg of the Mutual Fund Show.
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