SBI Mutual Fund House, India’s sixth-largest leading asset management house, has increased its investment exposure in entities like telecom, healthcare, and staples, thereby assuring that it will successfully benefit from the country’s overall consumption. Due to several favorable demographics like low penetration, an increase in the level of disposable income, and the play-out of the ‘J’-shaped consumption curve, the fund house has been successful in acquiring a bullish status. However, the fund house is steering clear of making significant investments in commodities stocks or the real estate sector due its bad performance over the last few months. With assets worth approximately 48,000 crores, SBI Mutual Funds believes that the current trend of softening global commodity prices can continue for a longer period of time, owing to several factors like an end in quantitative easing, global growth moderation, monetary tightening caused by emerging countries and so on. With investments in several leading firms like Nestle, Bharti Airtel, Cadila, ITC, HDFC Bank and Page Inds, the fund house is the product of a joint venture between the State Bank of India, India’s largest public-service lender and France’s AMUNDI.
It also has cut exposure in several firms like GAIL, ONGC, Asian Paints and Hindalco. Its star products like the MSFUMagnum Contra has provided excellent returns over a time-frame of 3 years, while during the same period of time, its benchmark surpassed its index too. Since they are at the end of their monetary tightening cycle, it is critical to understand that the monetary policy works with a lag effect, resulting in a short-period dedicated for the fund to realize its full impact. Its growth momentum has also been impacted with high-interest rates, and the RBI has taken full cognizance of this fact.
With the Reserve Bank of India raising and reversing its repo rates for around 10 time over a period of just 15 months, it is quick to justify its action by stating that is has to be done in order to control the stubborn price pressures. With rises in process of manufacturing goods and fuel, the whole sale price index of the country rose too. This is turn intensified pressure on the Reserve Bank of India to contribute towards controlling food inflation in the country. Although global food prices have reduced considerably over the last year, the same cannot be said about the inflationary rise in India. Although the Reserve Bank of India may give India the status of a “stock-picker’s paradise”, a study of the overall global and domestic macro environment reveals that a major move in the share indices is highly unlikely in the near future.
In such a scenario, it is important for you to invest wisely. Make sure you have learned about the principles of the company’s fund you seek to invest, its behavior to various market cycles and its stability, the growth prospects it promises to its investors etc. The reason is simple – IT’S YOUR MONEY. You do not want to lose out on your hard earned income, for reasons which you might have planned considering a lot of intricate details. Reasons like funding your requirement to buy a house without opting for a home loan, taking your family for a vacation abroad without opting for a personal loan and so on. If you are serious about growing your investments, make sure that you have planned wisely and invested rightly. List out all you requirements and seek to invest accordingly. Do not time the markets. But make sure that, you do not leave your funds to fate or act on impulses. Be patient. A down run of the market does not last forever. They are bound to be corrected over a period of time.