Post-Covid Recovery of Markets: Opinion Feature- Value Research Online

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In a question & answer section, the members of YouTube for Value Research Online were asked questions during the lockdown. In recent weeks, there are a lot of questions about the post-COVID recovery and shakiness of some types of debt funds. Returns from fixed deposits have collapsed which led a lot of savers to look at debt funds. But the credit and liquidity problems of the debt funds have made the process worrisome. In the Q & A, one class of questions getting repeated is that of people who are looking for advice on very long- term equity investments. Many people, during the COVID crisis, have realized that equity investments made over long periods, stay far into the positive territory even during quiet volatile times. This is when equity investments are done through SIPs.

Some of the questioners tend to wish for a ‘fill it, shut it, Forget it’ kind of an investment approach, for those who remember the old Hero Honda advertising copy from some decades ago. The one typical question was whether someone can recommend a fund in which the questioner can invest a lump sum amount and then forget about it for 20 years. This may not be a realistic question asked surprisingly. The answer to such a question is quite obvious. No investment in this world can be made and forgotten for 20 years least of all something which is made on equity. Dhirendra Kumar, CEO of Value Research responds that even if a bank deposit is made, one would have to look at the solvency of the bank, 20 years is a long time. He, who takes the questions is reminded of a well-known fund manager, who was asked on a business channel about his having held HDFC bank for 15 years. He replied that he had not held it for 15 years but 60 quarters. Every quarter, when the bank numbers came out, he was fully prepared for the shock.

Dhirendra Kumar says “The formula is well-tested, choose a small set of funds and start SIPs and don’t stop. The coming months and years are a great time to start because regardless of the excitement that we are seeing right now, businesses are going to have a bad time for a long time to come. That means that you will be able to build the basis of good returns easily by investing at low NAVs. This is the foundation for the future that you need.”

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