Nirav Panchmatia, founder CEO & chief strategist - AUM Financial Advisors, in an exclusive interview with Yogita Khatri of myiris.com shares with us his views on what he would advise clients to do now in MF investments, advice for starters and more.
Nirav Panchmatia, a chartered accountant (CA) and MBA (Finance) from Narsee Monjee Institute of Management Studies (NMIMS), Mumbai, is the founder CEO & chief strategist of AUM Financial Advisors . He is a well known mutual fund expert and is regular on leading business channels like CNBC Awaaz where he appears as a mutual fund expert on its show YOUR MONEY. He has spent the last decade in Mumbai working in leading financial institutions like Citigroup (investment banking analyst), ICICI Bank (Sr. manager proprietary investments & subsidiary businesses), Myiris.com (financial analyst) & Quantum Group (financial planner). He is also a financial trainer.
> What are the wealth management services that AUM Financial Advisors offer?
AUM Financial Advisors is a wealth management & financial planning initiative promoted by me in 2008 to cater to individual clients who are looking for personalized financial planning and investment planning advice that is unbiased, sound and that comes at a reasonable price. Unfortunately, in this profession, there is dearth of unbiased ethical advice. AUM Financial Advisors caters to Indians (Resident as well as NRIs) situated anywhere in the world who would like to invest in India after taking expert professional advice. Our forte is our expertise in mutual funds and AUM Financial Advisors has pioneered the concept of wealth management via mutual funds in India.
> Recent industry figures indicate a rising interest in monthly income plans (MIPs).This is at a time when the industry`s assets under management (AUM) reduced by around 12%. What is your view on MIPs? Is it an emerging preference?
At AUM Financial Advisors, we very strongly suggest monthly income plans (MIPs) as an important ingredient in most clients` portfolio. If one has a minimum 1.5 years investment horizon, then a well chosen MIP is your best bet in these volatile times when even experts are not sure. However, a word of caution here, please consult a mutual fund expert before choosing your MIP. The rise or fall in industry AUM should not be of concern to an individual investor. He should be clear about what he wants.
> What are the aspects that matter you when selecting funds for your clients? Your top 3 equity fund picks and debt fund picks with key attributes you like in them?
At our firm we believe in doing extensive research before we set on to create a dedicated investment portfolio for our clients. So, the first step is to do an extensive client profiling that involves understanding his financial needs & goals, where he stands today, his income & age profile, risk profiling etc. Based on his investment tenure & his financial goals, we then set out to create a dedicated investment portfolio for our clients using mutual funds. So to answer your question, the 3 most important aspects that matter while selection funds for our clients are: His/her financial goals, their investment tenure & there risk taking capacity.
It is very difficult to choose only 3 out of so many best performing schemes. Generally speaking, our top 3 equity funds would be IDFC Premier Equity Fund, DSP BlackRock Equity Fund & HDFC Top 200 Fund. Out top 3 debt fund picks would be Templeton India Short Term Income Plan, Templeton India Income Opportunities Fund & Canara Robeco Income Fund. Again, an investor should choose funds that suits his/her profile. Mutual fund advisory is not generic but very specific. The common attributes that we like across all the 6 funds is consistency of returns and top quartile performance in respective categories.
> For clients with regular savings, would you advise SIP or VIP (value-averaging investment plan)?
SIP stands for systematic investment plan and VIP for value-averaging investment plan. Both follow the concept of ``rupee cost averaging`` wherein one does not invest lump-sum amount at one go but one invests a fixed sum at regular intervals (weekly, monthly, quarterly etc.) thus ensuring that your purchase cost is averaged and hence an SIP or VIP investor is not bothered much about the market volatility. Both SIP & VIP is a great method of investing and every investor must necessarily have some investments via SIP/VIP. As to which is better, well, the jury is still not out on the same. While in an SIP you invest a predetermined fixed amount of your choice every month in a particular scheme, in a VIP the amount is not fixed but varies based on the index levels. Choose one that suits your profile. However, not all AMCs offer VIP so prefer SIPs there.
> In the debt space, with a one year plus horizon, would you recommend income funds, gilt funds or FMPs?
A gilt fund would be strict no from our side in today`s scenario. Go for a fixed maturity plan (FMP) whose term exactly matches your investment tenure. Be very careful while choosing income funds. I would rather suggest a specific fund viz; `Templeton India Short Term Income Plan` if you have a minimum 1 year investment horizon.
> How are you aligning your business to the new regulatory environment? What changes have you made / are you making in your business to sustain profit growth in the future?
We have no qualms about the new regulatory environment as AUM Financial Advisors is a product of the no entry load regime. Right from the day of our incorporation (October 2008), we have been strictly against commission based selling and have been charging ``advisory fees`` to our clients so that our advice remain unbiased. In fact we are thriving in the no entry load regime. We only entertain serious investors who are willing to pay advisory fee but not willing to compromise on quality of advice. We have fee model to fit all pockets and entertain clients with single 3 digit sips to ultra high net worth individuals (HNIs) with a dedicated portfolio for each of our client. We also offer `online financial planning, tax planning & mutual fund advisory`.
> What is your advice for starters?
For somebody who does not know much about investing and has just started, our best advice is to start investing in mutual funds via systematic investment plans at the earliest. You can rarely go wrong with this strategy. The only caveat being, please consult a mutual fund expert (your neighborhood MF distributor is not necessary an expert) to help you design a mutual fund portfolio specific to your needs.
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