In an exclusive interview with Yogita Khatri of myiris.com, Rakesh Goyal, SVP - Bonanza Portfolio talks on variety of subjects from financial planning and wealth management to equity and debt markets outlook.
An MBA in finance by qualification along with a diploma in international trade, Rakesh Goyal is the senior vice president - mutual fund, insurance, personal finance, distribution divisions at Bonanza Portfolio. With more than 15 years of experience, he is a part of Bonanza for the past 8 years and handles 10 regions of Bonanza single handedly. He has always wanted to take Bonanza at new heights and aims to take Bonanza among the top three brokerage firms. Goyal in the past has been a part of Bausch and Lomb, Word Index, Esgee Sports and Gaja Capital partners.
> Do you think enough is being done to address the broader issue of financial literacy?
No. I don`t think enough is being done to curb financial literacy, in fact I would like to mention that literally no efforts are being made by anyone, be it regulator, exchange, mutual fund or insurance industries. Whatever efforts are being made are entirely eye wash. We are one of the leading distributors of financial services but in last two years nobody has approached us to take up the cause of financial literacy so you can analyze the kind of efforts being made.
> Why can`t there be a common pool of advisers with insurance and mutual funds that can cross-subsidize the entire structure? Do you think this will be possible?
Neither this is advisable nor feasible. Both industries are very wide and there are so many fundamental differences between them that it is not practically possible for an individual person to know all the nuances of even one of the industry even after spending 20 years in the same field. So handling over the entire investments and insurance to one single person would wreck havoc to his life also and investments also.
> The competition in wealth management has been intense, with a number of small players having plucked in recent years. How do you place yourselves in that league?
We like to project that we are in national level player with diversified product profile and reach not a niche player.
> What are the financial planning lessons from 2009 that investors should incorporate in their strategies this year?
The most important lesson the investors have learned is invest for the long term. After a strong rally in 2007, in 2008 we witnessed one of the worst crises since the Great Depression. There was heavy sell off and confidence levels were at their rock bottom. We witnessed even many long term investors selling off their MFs and ULIP plans at a loss. Many of them were even investing through the SIP route. At a time when they needed to invest more, they withdrawn investments instead. This is what we term as `fire-sale`. And all these investors missed the rally that immediately followed in 2009 when markets jumped as much as 80-100% from their lows. Hence, the most important lesson to be learned is to invest regularly and to invest for the longer run.
> SEBI extends ASBA to MFs, reduces NFO period to 15 days, how do you view this move by SEBI? What are the likely implications?
The basic idea here is to further protect investor`s interest. Till now there were many
NFOs that were open for subscriptions till 30 days or some even 45 days. After closing, these NFOs take around 20 days more to launch the fund. Just imaging the situation of an investor who has invested on first day of NFO. His/her money would be blocked for almost 2 months without any interest/activity.
Hence both these measures intend to cut down on that time taken for allotment of units to investors and at the same time it helps to rest the funds with investor`s account till the date of allotment. Till now we were witnessing investors investing only on last 2-3 days of NFO. Now we may see inflows spread throughout the fund offer period.
> With interest rates beginning to harden, what is your view on the debt markets going ahead? What is going to be the immediate reaction from banks? Will they be raising any rates at all?
The debt markets in the near future are sure to be hit by the hardening of interest rates by RBI. The broad movements of yields would be guided by primarily two factors: the concentration of government borrowing program on the first half of this fiscal, and second, the way RBI manages the yields through its open market operations. The shorter end of the curve may be more susceptible to volatility in the near future owing to liquidity withdrawal, reducing demand and rate hike expectations. I do not see immediate rise in interest rates by banks unless and until they see real rise in the funding costs and trimming margins. The credit off take is still at a very naive stage of recovery and hence I don`t see any immediate reactions from banks.
> How do you believe the overall global investment environment in this year is going to look like?
With lack luster debt markets, it would be equities that will rule the roost this year as markets across the globe are witnessing an increased rise in risk appetite from investors. The emerging markets would continue to attract increased liquidity throughout the year. The broad movements in the markets would be guided by mainly three factors: the FIIs money inflow, the global happenings especially the Euro nations, and trend in commodity prices. It would be a year where performances would be more of stock specific rather than broad market movements.
> Your advice to retail investors?
Invest early, invest regularly and invest for the long term. Invest in good rated mutual funds through SIP route and do not bother about short term market fluctuations. Instead try investing more when you see corrections.