MFs, Ad­vi­sors Per­suade In­vestors to Link Equity In­vest­ments to Goals

Ad­vice aimed at en­cour­ag­ing clients to stay in­vested for longer pe­ri­ods

The Economic Times - - Companies -

Mum­bai: Mu­tual f unds and wealth man­agers have fig­ured a way out to re­duce shuf­fling of equity scheme port­fo­lios by in­vestors in re­sponse to short-term swings in the stock mar­ket. Fi­nan­cial ad­vi­sors are ask­ing their clients to link eve r y in­vest­ment i n e q ui t y schemes to a goal such as hol­i­days or child’s col­lege ed­u­ca­tion, while mu­tual funds are push­ing prod­ucts la­belled as re­tire­ment or chil­dren’s fund. Such in­vest­ment strate­gies are aimed at en­cour­ag­ing in­vestors to stay put for a longer pe­riod.

“Wheny­ouhavede­fined­goals,abil­ity to choose which as­set class to in­vest in and han­dle volatil­ity in that as­set class is bet­ter,” says Vishal Dhawan, chief fi­nan­cial plan­ner at Plan Ahead Wealth Man­agers.

Ad­vi­sors rec­om­mend di­ver­si­fied equity or bal­anced funds with a con­sis­tent track record for long-term in­vest­ments. To strike a chord with in­vestors, mu­tual funds have gone one step ahead with some smart brand­ing like chil­dren’s ed­u­ca­tion and re­tire­ment funds. Axis Chil­dren’s Gift Fund, HDFC Chil­dren’s Fund and TataYoungCi­ti­zen­sFun­darea­mong the pop­u­lar schemes in the child savi ngs c at e g o r y, whil e HDFC Ret i re ment Fund, Rel i a nc e Re­tire­men­tFun­dandFranklinIn­dia Pen­sion Fund are pop­u­lar among re­tire­ment plan­ners.

“Th­ese funds in­voke a sense of emotion. When you mark it for a goal, you are men­tally pre­pared to hold it and not with­draw it,” says Harsh­vard­han Roongta, a Mum­baibased fi­nan­cial plan­ner.

Ad­vi­sors usu­ally sug­gest in­vestors use the sys­tem­atic in­vest­ment plan (SIP) route to meet their long-term goals. “It is very tough for in­vestors to time the mar­kets and hence sys­tem­atic in­vest­ments to help them meet their long-term goals is an op­tion they should con­sider,” says Sridevi Ganesh, a Chen­nai-based fi­nan­cial plan­ner.

For in­stance, for short-term goals like pay­ing school fees for your child which is two months away, in­vestors are asked to in­vest in debt as an as­set class. Sim­i­larly, some­one aged 35 year old who plans to re­tire 25 years hence, is rec­om­mended an equity fund.

Mu­tual funds and wealth man­agers also ben­e­fit when an in­vestor stays in­vested for a longer pe­riod.


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