Dear Stakeholder / Reader / Investment Enthusiast,
Namsakaram! This greeting got back its mojo in recent months not only in our country but all over the world. Being a proud Indian, this is great news for me, but the circumstances have not been good. The Covid19 pandemic is creating a long-lasting negative impact in every aspect of our lives. This is a great opportunity for many of us to retune some of the things in our personal and professional lives. As your financial advisor, it gives us great pride to be on the receiving end of your trust on us to manage your wealth during these uncertain times.
The impact of Covid19 and the fiscal and monetary reactions to tackle it
The covid19 pandemic has created a strong negative sentiment in most of our lives with varied magnitudes. This is the time we need to develop a strong will and fight the negative impact and the sentiment created by this pandemic. Small business owners are impacted the most and deserve respect from all sections of our country for handling these circumstances well.
The Indian government along with the state governments have been doing a great job implementing the imposed lockdown and handling the health care infrastructure at a country and state level. The central government has not yet used its full force of fiscal policy to help the country economically but is expected to do so in the near future. It has already taken steps like clearing state government GST dues, Income tax refund dues and helping wage earners to deliver a decent amount of financial relief to them through Direct Benefit Transfer.
The RBI has been working day and night to primarily handle few things like, availability of liquidity in financial markets to boost positive sentiment, reduce saving benefits and improve borrowing benefits, providing relief to borrowers so that there is no spike in defaulters due to Covid19, controlling the magnitude of rupee slide against global currencies. I feel the RBI has been doing a very balanced act of helping the economy unlike many other central banks that have gone too far in giving out benefits to the financial markets that can have catastrophic implications in the future.
The importance of multi asset investing in capital markets
We have been seeing the equity markets globally losing a lot of value and almost all the central banks lowering deposit rates to make it unattractive for investors to deposit their money. The ground reality in many real estate markets is the lack of free-flowing rents due to slowdown in the economy and national lockdown. Many business owners have either stopped operations (manufacturing and infrastructure) or have increased operational vulnerabilities (work from home data security) due to the Covid19 pandemic.
Almost every investor in our country has been impacted negatively in some way or the other at varied magnitudes. The value of investments has eroded to a significant extent in many asset classes and these are the times to learn the importance of multi asset investing. Specially, holding cash or very low risk liquid investments like debt securities in our portfolios. This gives us the advantage of reducing the impact of value erosion in our portfolios and giving us a chance to take more risk when other asset classes values are down significantly.
Having cash feels like a measure of safety during these times but that cash should be invested wisely when time comes.
What actions did we take to be prudent and proactive with your investments?
As a fiduciary SEBI registered investment adviser, our primary responsibility is to manage your wealth to your best interests and avoid capital erosion to the best possible extent. There is always a fundamental and a sentimental approach toward investing, and during these uncertain circumstances, it is difficult to stick with fundamentals by ignoring sentiments completely. We believe we have eliminated most of the risks in your portfolios proactively even before any economic crisis like this by following a strict PPP (Person, Purpose and Price) approach towards investing your wealth. For anyone who had a time horizon less than two years, the equity market exposure their portfolio has will be less than 30% which eliminates market risk to a great extent and also gives an opportunity to invest further if needed by utilizing cash.
We have a data driven approach while taking investment decisions which involves economic and company level data. For example, when the February China PMI data was announced at a record low, we decided that equity risk from your portfolios should be reduced as globally there will be economic shock waves due to Covid19. We will continue taking investment decisions based on economic and company level data in our heads and sentiments in our hearts.
Technology and Scientific Advancement – The unsung hero of the Covid19 pandemic
We as a business are fully operational even during this national lockdown like many other businesses in our country maintaining proper social distancing. This is only possible due to the technological advancements we have as a society. Through this letter, we wanted to give the due credit to technology and scientific advancement we have as a society, without which this pandemic would have resulted into a catastrophic event.
Anyone who says that they are working from home or paying via UPI or credit cards or investing through websites and apps or getting their salaries credit directly to their banks and not receiving cheques need to thank the level of technological advancements we as a society achieved.
I cannot imagine containing this pandemic without having faster diagnostic technologies to test for the virus in our bodies and treat us if we have it. Social media and digital media have done a great job creating awareness to the masses about the safety measures we need to take to avoid the spread of Covid19. This level of efficiency and speed couldn’t have been achieved with just newspapers as television as broadcasting means.
We believe technology and automation will play a great and vital role in reviving us economically from this pandemic.
Please feel free to talk to us anytime about your investments, the economy, future outlook and anything that we can be a part of the discussion. We are always here to navigate you through your financial journey.
SEBI Registered Investment Advisor INA200012683