In an interview with Yogita Khatri of myiris.com, Amit Trivedi, Proprietor, Karmayog Knowledge Academy says, ``Mutual fund, in my opinion, is the best investment vehicle for retail investors.``
Amit Trivedi is a financial planning expert and owner of Karmayog Knowledge Academy - a business imparting knowledge in investment markets. He has over 17 years of professional experience in corporate sector. Out of which, over 13 years have been spent in businesses related to capital markets. In the last assignment, Amit was Head of the IFA Channel for Franklin Templeton Asset Management Company. He has also completed the investment planning as well as insurance and risk management modules under the CFP program.
> Could you please tell us about Karmayog Knowledge Academy? When did you begin journey in the financial services industry and how has the journey been so far?
Karmayog Knowledge Academy started three years back in March, 2008. It was set up with an objective of spreading knowledge about investments. We have taken three routes for this: investor communication through mass media, investor awareness seminars and intermediary training programs. We partner with various organizations on this journey.
> With the markets correcting from the month of January, what kind of portfolio rebalancing should a retail investor look at now?
I think retail investors would be better off ignoring such monthly market movements. Too much attention is paid to such short term movements and that leads to investors taking emotional decisions. Such decisions are, on most occasions, not in the best interest of the investors. If someone is feeling nervous with the wild swings of the market, one may be better off consulting an expert advisor. At Myiris, you all talk a lot about SIP. I would suggest investors must continue their SIP as per their investment plans.
> Retail participation in mutual funds, especially in the equity-oriented schemes, has been declining. What are the primary reasons for retail investors staying away from mutual funds? How do you see the trend going ahead?
It is amazing, but then it is understandable. People get turned off seeing the ``mutual fund investments are subject to market risk`` line. Just because they are told that mutual funds are risky, they turn away. There are many other products where the word ``risk`` is not uttered and investors feel comfortable. The other reason for closure of many mutual fund folios these days is what the psychologists call ``anchoring`` effect. Either the investment value or the market has returned to the previous peak of late 2007 - early 2008. There is a tendency for investors to take money out at no-profit-no-loss. Investor awareness and education is the answer in both the above cases. Mutual fund, in my opinion, is the best investment vehicle for retail investors.
> Equity-linked Savings Schemes (ELSSs) are the best initiators for investments in mutual funds but after the Direct Taxes Code (DTC) they will become irrelevant. How is it going to impact the industry? Please share your thoughts with us on same.
This is logical. DTC can impact inflows into ELSS. However, numbers suggest that anyway this category does not contribute to the overall inflow in equity mutual fund category. It is unfortunate that ELSS has not been able to generate the interest of investors.
> How do you see various debt instruments performing given the volatile markets and rising interest rates?
The current interest rates offer an opportunity to park money in short term debt funds. These funds can take the benefit of high rates over short maturity as well as can book some capital gains. Some people have preferred to park their money in fixed deposits. I would suggest short term debt funds would be better than fixed deposits due to high liquidity and better tax efficiency.
> Financial literacy and customer education is seen as a step towards helping the common man take right investment decisions. Are you planning any initiative in this regard?
As mentioned earlier, Karmayog Knowledge Academy`s objective is to spread knowledge about investments. In this regard, we have been doing many activities already. We just want to increase the pace and the reach.
> Have you as a team set a goal for the next three years for Karmayog Knowledge Academy? How do you plan to expand your business?
We will continue to work on our existing model of delivery through multiple channels - face-to-face, mass media, electronic media and internet. We may look to expand our team over the next couple of years.
> Is there anything else you would like to share with our readers?
We are living in very interesting times. The opportunities available today are many times more than two decades back. The key is to ride the wave and not mess up with anything.