In an exclusive interview with Yogita Khatri of Myiris.com, Vipin Khandelwal, Chief Executive Officer (CEO), PersonalFN says, ``For investors in debt instruments, we are advising to invest in liquid funds and ultra-short term funds.``
> Can you please tell us about ` PersonalFN `? What services do you offer? How did you step up in advisory business?
PersonalFN is a service brand of Quantum Information Services. We have been researching mutual funds, fixed income instruments, gold, and insurance for over 10 years. We are focused on providing well researched, unbiased and expert advice to clients on managing their personal finances. This is offered through online research services and personalized advisory to individuals.
We charge fees for our research and advice. While research was always available for fee, we started charged fee for personalized advice in 2008.
> How do you reach out to your clients? How do you win the confidence of your clients?
Our website www.personalfn.com and the internet is the core medium to reach out to clients. We continue to educate investors through informed and researched articles around financial planning, mutual funds, insurance, taxation, almost all areas of personal finances and which are available on our website.
Clients repose their confidence in us based on the views that we present which are guided by only one thing, the client`s interest. We have always provided unbiased advice to our clients on financial planning and investments. This is what leads our clients to refer potential clients to us.
> What are the parameters that matter you most when selecting funds. What would you recommend investors on equity and debt side?
While selecting equity and debt mutual funds, we rely on our research process which has evolved over a decade and takes into account a host of qualitative and quantitative parameters. We primarily select fund houses which have completed at least 3 years of track record. Thematic and sector funds are not covered by us as we believe that they purely flavor of the season, and tend to plunge more during the down turn of the equity markets and expose investors sector to a very high sector specific risk.
Moreover for equity funds as well as debt funds, we also assess the investment processes and systems followed by the fund, to understand the rationale which the fund house follows while managing investors` money.
To equity investors, we recommend them to invest for the long-term in diversified equity funds. Taking into account the volatility of the equity markets we encourage investors to adopt the SIP mode of investing as it provides them with the advantage of rupee-cost averaging and compounding. For investors in debt instruments we are recommend them on the basis of the interest rate cycle; so at present we are advising clients to invest in liquid funds (with a horizon of 1 - 1 and 1/2 month) and ultra-short term funds (with a horizon of 3 - 6 months) taking into fact that RBI may still hike policy rate taking into account the fact that WPI inflation still remains at elevated uncomfortable levels of the RBI.
> What is your view on the current market scenario? What are the risks an investor should look out for in 2011?
The scam stories unfolding may continue to haunt the markets and the respective sectors such as telecom, realty and banking and financial services, as they would remain under a spell of these scams. In effect political uncertainties would prevail as the opposition may make every attempt to tarnish the image of the Government in power. But in order to safeguard against these uncertainties and retain seats, as a political move the Congress government may announce a `populist` budget.
Further taking a holistic view we think that markets could consolidate for the first 6 to 7 months of the year 2011, where the bulls and bears will continue their tussle. However, a 10% to 15% upside can be seen in the intermediate. But again at every upside, selling pressure may come in as valuation concerns may appear.
> How many fund houses do you deal with? In which fund house do you have the maximum AUM (in terms of percentage)? Tell us your favorite all-time MF schemes and fund managers.
Our mutual fund selection process covers all the mutual schemes which have at least a 3 year track record. Also the process followed is very robust, which in effect produces a resilient output of recommended funds. So, in that sense we deal with all mutual houses but our recommendations are purely on the basis of our mutual fund selection process.
Also we do not have any favoritism for a specific mutual scheme nor the fund manager, as our advice depends upon the research output and scheme recommendations are classified under each category to suit a client`s risk profile and investment horizon.
> What are the emerging trends in wealth management in India?
Fee based advice over commission based selling should gain prominence as clients seek unbiased and independent view on their investments.
> The recent fraud case in a bank`s wealth management unit has put a spotlight on the way wealth management businesses are conducted. Do you see that as a positive or a negative development for advisors? How do you see the business environment for advisors in 2011?
We think that investors themselves are digging their own grave by trusting unscrupulous relationship managers, who are interested increasing their AUM (assets under management) share (for getting better variable pay) rather than maintaining professional relationships in a true way. The very instances of investors signing blank forms, leaving the job of filling the other necessary details to their relationship managers encourages such a frauds to happen.
The regulators are going to force the wealth managers to become more transparent. Advisor regulation is also something that we can see emerging very soon.
> What`s the one thing that you would change in the financial services industry, if you had the power to make that happen?
All transactions, fee and commissions would be made absolutely transparent. The client should know how much is paying, directly or indirectly, and what is the service he is getting in return.
> What three books related to personal finance would you recommend every person read and why?
Unfortunately, there are not many books that you can refer to for personal finance. Reading books for financial knowledge is not compulsory. You can refer to informative and investor oriented websites, blogs, etc which will update you about planning and investments.
> Is there anything else you would like to share with our readers?
To readers I would like to say is that whenever you are making any investment decision, have a proper objective in mind as why you are making that investment and what do you want to achieve by that. Investment decision has to have a purpose in mind so that it can help you in achieving your objective and if you are not aware about your objectives or goal in life then take the help of financial planners who can help you build the discipline to do that.