Investors need a plan aligned to their goals

Ordinary investors are more receptive to funds that lay out a well-defined strategy and objective, says Chandresh Nigam, managing director and CEO, Axis Mutual Fund, in a conversation with Vivek Malik 

x Tell us about Axis Mutual Fund’s new child gift fund and the reasons behind its launch.

We had been thinking about launching a child fund for a long time and had filed our application with the regulator sometime back with a view to launch a product that is clear in its objective rather than classifying it as equity, hybrid or balanced fund. Most investors don’t understand this terminology and probably don’t even care for such a classification. They are not interested in knowing the level of allocation to large-caps or mid-caps. All the investor is asking for is a well-defined mandate for his investments. We want to change this jargonised language and tell them what this fund is actually meant for. We wanted to talk to the investors in a language that they understand and link it to their goals, dreams and aspirations. We have done a survey wherein 83 per cent of those surveyed said that their biggest concern is their children’s education, going forward. We want to help them plan towards their biggest concern with this product. To give you an example of insurance plans, where there has been a clear cut objective such as insuring a girl child or a targeted group, such policies remain in force for a much longer time. Despite all the efforts over the years, the penetration of mutual funds remains at a lowly 3 per cent. It’s high time we engaged the investor in a manner so that his investments become more than just plain investments.

x What are the key features and the lock-in period of this fund?

Investments in this fund can be made only in the name of a minor child (aged less than 18). There is also a feature wherein the investor can opt for a lock-in, which will be in force till the child turns 18. To our surprise, most investors are opting for a lock-in and that proves what I just said: that investors are looking for plans, which are aligned with their life goals and don’t mind going for a long lock-in period. We are looking at a scenario where the non-lock-in option remains, but majority of the money flows into the lock-in option.

x Speaking of other funds from your bouquet, how do you view the performance of Axis Triple Advantage fund?

If you look at how one of the underlined asset classes of the fund—gold—has gone down over the last two years, it is par for course considering the ups and downs different asset classes go through over market cycles. Besides, I believe that around 10 per cent of investors’ portfolio should have exposure to gold. This has more to do with hedging your investment portfolio. The fund remains a great product; yes, we have been a little disappointed when it comes to the overall returns but with regard to managing it, we have done it brilliantly. The product idea is still relevant and who knows, gold might see a turnaround in the coming months.

vivek@outlookindia.com