- 2 years ago
Are you beginning your investing journey and wondering how to deal with a market near all-time highs?
Sundaram Mutual Fund's Sunil Subramaniam and Infinity Advisors' Ruchi Sankhe discuss how one should go about building their first mutual fund portfolio.
Sundaram Mutual Fund's Sunil Subramaniam and Infinity Advisors' Ruchi Sankhe discuss how one should go about building their first mutual fund portfolio.
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NewsTranscript
00:00 Hi, thanks so much for joining in.
00:01 You are watching the Mutual Fund Show on BQ Prime.
00:04 My name is Alex Mathew.
00:05 Like the name suggests, this show gets into all of the details mutual fund related and
00:10 gives you answers to all the questions that you might have along your investing journey.
00:15 And on that journey, the first few steps are often the toughest to make.
00:21 On this particular episode, we will be dealing with just those steps and hopefully helping
00:26 you along your way.
00:28 We're dealing with what I would like to call a starter guide for those that are beginning
00:33 their investor journey.
00:34 Now, having said that, it's not necessary that those that have already started can't
00:40 benefit from this conversation, because my guests, I'm sure, are going to be able to
00:44 give you quite the insight that you need to improve the decisions that you're already
00:50 making.
00:51 Let me introduce my guests for the day.
00:52 We've got Sunil Subramaniam, who is the MD and Chief Executive Officer of Sundaram Mutual
00:57 Fund, and we've got Ruchi Sankhe, who is Investment Advisor at Infinity Advisors.
01:02 Thank you so much to the both of you for taking the time.
01:05 Now, I will start with you, Sunil, because I think this is the perspective that my viewers
01:11 particularly tune in for.
01:14 We're just about 600 points off the 20,000 mark for the Nifty 50 as of close today.
01:21 And I think a lot of people talk about when you start your journey, sometimes the juncture
01:28 that the markets are at is more beneficial than others.
01:32 So considering that we're near that 20,000 mark, how should investors, in your opinion,
01:37 begin their journey?
01:38 So I think, first of all, it depends on the lifetime of your investment.
01:45 I think it's very important for investors to understand in what time frame they're expected
01:50 to remain in the markets.
01:52 And we're talking about the equity markets here.
01:54 I would say that anything short of five years is not something that – and you mentioned
02:00 in the beginning of the program that you were talking about startup, right, for somebody
02:04 who's new coming in.
02:05 I would absolutely say that stay away from the equity markets if you are looking to make
02:10 a quick buck in one year or two years or even three years, I would say.
02:15 So first thing first, do you have a clear five-year investment horizon in your mind?
02:20 If you do, then the market levels do not matter because the market absolute levels which are
02:28 scary like a 20,000 or 30,000 cents or whatever you want to see, those levels are meaningless
02:35 numbers because they represent the cumulative addition of profits over the years of the
02:41 companies in that index, and they're shown at a particular level.
02:44 So it doesn't matter because when you enter, the stock market has the ability to give you
02:51 returns from the future earnings of these companies.
02:53 So what in the past has happened for them to reach these levels of share prices that
02:59 the index reflects a particular number is all in the history.
03:03 It's the future that the market delivers returns from, and the two things that deliver you
03:07 in the future are, one is the future profit growth of the earnings in the index or in
03:12 the fund portfolio, and the second is that somebody seeking to pay a price for future
03:17 earnings.
03:18 Let me explain a little bit here.
03:19 Suppose you have a five-year horizon.
03:22 So in those five years, the companies in the index will deliver certain profits which rightfully
03:27 belong to you as the owner of those stocks, whether you buy it in the index or through
03:31 a fund, number one.
03:32 So you should make that return.
03:33 The second is at that time when you are going to sell your index portfolio, somebody has
03:39 to buy it.
03:40 What is the price he is willing to pay for the next five-year outlook is what you're
03:45 going to encash at the end of the five years.
03:48 So the point is, if you just look at the past track record, even at the highest of the highs
03:53 of the market, the lifetime highs at various stages, markets have reached lifetime highs.
03:57 If you stayed five years, two-thirds of the time, you had a chance of getting inflation-beating
04:02 returns.
04:03 It's a probability game, naturally.
04:04 You can't say it's guaranteed that you'll get that.
04:07 But five-year plus, if you are, you are a fairly comfortable wicket to get inflation-beating
04:13 returns.
04:14 So as a startup investor in equities, please get that clarity in your mind.
04:19 Other things that you should look at, we'll talk as the show progresses, but first thing
04:23 is have a five-year button-down time frame.
04:26 I will not look at my portfolio until five years are completed.
04:30 I think that's a basic thumb rule starting point for any equity market investor.
04:35 Ruchi, you speak to a lot of people in the course of your daily activities.
04:41 I'm assuming that a lot of fresh investors come to you, people that are looking to start
04:45 their journey.
04:46 What are the first few things that you're telling them now?
04:48 And does that conversation slightly change based on where things are, particularly when
04:55 you're talking about the equity markets?
04:57 While I overall agree that equity is a long-term investment, but the market levels are very
05:05 high today.
05:06 And it's a little bit uncomfortable for new investors who are coming in to see that whatever
05:11 funds they put in, if you start seeing a reduction in value over the next six, eight months,
05:17 then it starts to make the investor nervous and some of them can even withdraw.
05:21 So be cognizant of that and the levels that the way they are, while the macros and micros
05:28 for India are not bad at all.
05:30 And you can see the corporate earnings have been strong.
05:33 Globally, the factors, which is the high interest rates, pulling down the equity markets, the
05:39 US dollar index being at the highest level, that's making the markets nervous.
05:44 And that is going to have some impact on investors.
05:47 So I would actually tell, even though five-year may be a timeframe that you're looking to
05:52 invest in, please be cautious and stagger in investments.
05:55 That's how I would approach the rhetoric today with the investors and for existing investors
06:01 as well.
06:02 Some of us, some of the investors are looking at being underweight and then staggering in
06:06 again.
06:07 So I think it's quite prudent because when the markets are at high, after that almost
06:13 12 months, you see very muted returns and that's not the expectation that equity investors
06:18 have when they invest in this asset class.
06:20 So I would say that, yes, be a little bit more cautious for starting out investors and
06:26 try and stagger in the investments rather than for the entire amount that you have right
06:30 now, because it may not be a smooth ride from here onwards.
06:34 Okay.
06:35 We'll get into the nitty gritties in just a bit, but I want some perspective, Sunil,
06:40 from you in terms of managing funds as well, because based on the experience that we've
06:46 seen in the recent past, in 2023 as well, we're talking about today, there was an interesting
06:52 point where the small cap index here in India, of course, it's not necessarily a like-to-like
06:57 comparison, has beaten the Russell 2000 by a magnitude of growth, right?
07:05 If I'm not mistaken, the Russell is now negative for the year.
07:08 But having said that, we have a lot of people that are looking to ride that wave.
07:14 And as a result of that, there's a lot of money that is chasing, shall we say, very
07:20 few stocks in that small cap universe, even though there are a large number of stocks,
07:27 because really the quality comes into question there.
07:30 How much of a challenge is it for you when you deal with that recency bias, if we can
07:35 call it that?
07:36 No, absolutely.
07:37 It is a big challenge as a fund manager, because when people give money in small cap mutual
07:44 funds, the restrictions are that 65% of that money has to go into small cap stocks.
07:49 And when you're giving me money, we as an internal fund house have a 5% rule that not
07:54 more than 5% can be kept in cash.
07:56 Okay, so that restricts it, that means whatever money comes in 95% of that money has got to
08:02 get deployed.
08:03 And so what is the solution?
08:06 It is a challenge.
08:07 So I think there are two solutions that as a fund manager we look at.
08:10 First is that buy only quality.
08:12 So how do we define quality here?
08:14 Quality is consistent, sustainable EPS or cash flow growth for that company over the
08:20 next foreseeable future.
08:22 So the first thing is I will not buy any company that doesn't give me that.
08:25 Its share price may be rocking, analysts may be recommending it, but it doesn't matter.
08:29 There has got to be quality as first defined by sustainability.
08:33 Second corporate governance of the ownership band, right?
08:37 Good quality corporate governance is a key.
08:39 Third thing is that that company must be in a market share gainer, right?
08:43 The definition of quality is it must be gaining market share, it must have the ability to
08:48 replicate its portfolio across geographies, you know, as a company expanding.
08:53 So when you have all of the and some kind of entry barrier for the company.
08:56 If you take all these boxes, most probably this company is going to be a high value company
09:01 because there are 44 other mutual fund houses with small cap schemes who are all going to
09:05 be thinking the same way.
09:07 The second aspect then that comes in is that since I buy the stock from a five-year outlook,
09:12 what is typically shown in the market is a trailing PE ratio, which is last year's earnings,
09:18 or a one-year forward PE ratio.
09:20 And those stocks could reflect a certain high level of valuation when in a one-year forward
09:24 PE.
09:25 However, as part of my research, so that's where our own research becomes important,
09:29 I will look at the company's earnings over a five-year period, attribute a probability
09:34 to a bear case scenario, a bull case scenario, a realistic scenario, and come at a weighted
09:39 average EPS for the year FY23, 24, 25, 26, and 27.
09:47 And when I then look at the chart screen with the information at my hand, if I feel from
09:51 a five-year holding, which would effectively mean FY28, right, if that sounds value, I
09:57 will buy that stock preferentially regardless of what that one-year forward PE is showing
10:02 up.
10:03 So that's where the benefit of research comes in.
10:07 And then, of course, finally, the biggest astra in any mutual fund manager is diversification.
10:11 Don't put all your eggs in just a few baskets.
10:15 Spread your risk across equally so many good quality companies.
10:18 And like Ruchi said, given the fact that money flow into this sector is very variable, there
10:23 could be chances that the portfolio could go down.
10:26 But because the other thing which I would say Indian advisors like Ruchi and all the
10:31 mutual fund distribution companies have done, which is an excellent thing, is a lot of flows
10:35 into the small cap are coming through SIPs, which means that not only I'll get money this
10:40 month, I'll be getting money every month.
10:42 So if there are future corrections, these same good quality stocks, I will be able to
10:46 buy them at, say, 5% cheaper, 10% cheaper over the next 6 to 12 months.
10:51 And that rupee cost averaging benefit will come ultimately to benefit the investor.
10:56 So I would say that the counter to that lies in these kind of processes.
11:00 So I have follow-ups to that, but I first want to go to Ruchi as a continuation to this,
11:05 because the reason I spoke about small caps, Ruchi, is because a lot of people begin their
11:10 investing journey based on what is hot at that moment.
11:13 And they are of the opinion that if they get into this, they will make quick returns.
11:19 And again, it ties into the first question as well, right?
11:22 So when you're building out that portfolio, what do you pay attention to?
11:26 And I think we've spoken on this show and many shows in the past also about the requirement
11:31 for goal-based investing and identifying what you need the money for from that perspective
11:37 when you're choosing the mutual funds to invest in.
11:40 And if that is indeed the instrument you're choosing, how do you go about it?
11:44 Do you choose, say, for example, I need to buy a house in 10 years' time.
11:48 Do I set that I need three mutual fund schemes in that goal?
11:53 Or do I have an overarching asset allocation strategy saying that, OK, I have retirement
11:58 in 30 years, a house in 10 years, and children's education in five years?
12:03 Yeah, you know, I mean, actually, I have a little bit of a different opinion on this,
12:09 why goal-based investing also depends on the purpose of investment, investable surplus
12:14 that you have.
12:15 Goal-based investing might work for certain people, but otherwise, I am actually a believer
12:22 of asset allocation and portfolio, which is sort of constructed for a longer period of
12:26 time.
12:27 You're right, if the goal is very near-term, then the kind of instruments that you will
12:31 build in will be a lot more conservative because you can't handle the volatility then, because
12:37 you know that you've got a near-term goal that you have to achieve.
12:40 If it's a longer-term goal, then you can invest in aggressive or growth-oriented kind of assets.
12:48 And however, depending upon the purpose, if it's a larger purpose, I always believe it
12:53 makes sense to have portfolio allocation across different asset classes.
12:57 So you may want to capture different market caps in your asset allocation.
13:01 You may want to capture different kinds of strategies, whether it's growth, value.
13:06 Having said that, so that could be, but if it's a purpose is very small and it's a near-term
13:11 goal, then you may want to look at conservative kind of, you know, assets or funds that you
13:16 want to use to reach, lead up to that goal.
13:20 So I think a little bit of a different opinion that it doesn't have to be just, you know,
13:24 goal-based.
13:25 Depending upon the purpose, you could actually have a portfolio allocation, which will effectively
13:30 help you achieve those goals.
13:33 But the construct or the way to lead, the path to lead to that is a bit different than
13:37 creating just a goal and then investments that to meet that goal.
13:41 Okay, fair point.
13:43 So you spoke in the previous answer, Sunil, about the strategy that is employed, right?
13:49 And we were specifically talking about small caps.
13:52 But just for the benefit of our viewers, and we've spoken about small caps in the recent
13:56 past as well, and mid-caps, I think, also can be spoken about in that same breadth.
14:01 You said that you have that 5% cap for cash.
14:05 But then what does a fund manager do if they see that there is not enough value to be found
14:10 at this juncture?
14:11 Money is continuing to pour in.
14:14 And I think it's important for the investor to understand this as well, because they continue
14:17 to put money in, putting pressure on the fund manager.
14:20 What does the fund manager do?
14:23 Some fund houses have stopped inflows into small cap funds, because they feel that the
14:28 valuations are very high.
14:30 So they have stopped accepting fresh inflows through lump sum investments.
14:34 Some have done, those who feel that way.
14:36 But for other people, within a 65%, I said, in a small cap fund, SEBI actually allows
14:42 you up to 35% to buy even large caps.
14:45 So I think you can buy.
14:46 You can also, all funds have created the ability to have arbitrage, that is, buying the market
14:53 itself, right?
14:54 So I think up to 50% of the portfolio, you can buy the market broadly and not necessarily
14:59 choose.
15:00 So there are enough tools at the hand of the thing, right?
15:03 You shift your portion of your money into safer large caps, while the hawa, as they
15:08 call it, is there in the small cap.
15:10 And then you can bring it back later when there are corrections, because large caps
15:13 are easily liquid, easily tradable, number one.
15:16 Second, you can buy hedges in the market, up to 50% of the portfolio.
15:19 So these two tools serve the purpose.
15:21 But the third, I would say, is also the fact which I said back again, right?
15:26 But it is not that entirely every stock in the small cap is at a high.
15:31 There are certain stocks only which are there.
15:33 So I'm sure that if you take a long enough perspective, at today's market, I do not
15:39 feel that it's a market where I should permit my fund managers to take five.
15:44 This is not a semi-prescribed rule.
15:45 This is a our own company prescribed rule.
15:47 You say I can allow five to ten, but I don't want to do that, because I'm of the view that
15:52 with a five-year outlook today, given India's growth potential, there will be corrections
15:57 in the future.
15:58 There will be volatility.
15:59 But I think that a staggered approach, as Ruchi said, so the fund manager will effectively
16:04 also stagger the money into the market that he gets, right?
16:08 And buy it with a longer-term outlook.
16:10 Like I said, don't look at FY28 and even FY30 earnings of a company.
16:15 If it's justified, buy it there.
16:17 So I would say that--
16:18 Before I go--
16:19 So point taken.
16:20 Point taken.
16:21 Before I go to Ruchi on the next question, I do want to get your fund view very quickly
16:26 on where you see the market.
16:27 Since we've been talking about this markets are close to life highs, what is the fund
16:31 view on the markets right now?
16:33 So our fund view on the markets is that--
16:36 Are you asking me or Ruchi?
16:37 No, no, I'm asking you, Sunil.
16:39 Fund view.
16:40 You're asking me.
16:41 OK.
16:42 OK.
16:43 Our fund view on the market is that the markets have priced in the next year's growth fully.
16:48 OK?
16:49 The expected EPS growth of the next year, that is FY24-25, have been fully priced in
16:55 by the market.
16:56 Right?
16:57 So the markets at the current view, with a one-year outlook, you could be in for some
17:01 disappointments if certain companies in certain sectors do not deliver that expected view.
17:06 So let me clarify this, which means, let's say the market is probably discounting a 21%
17:11 earnings growth.
17:12 Right?
17:13 Even if the economy and the sectors deliver 18%, the market could correct.
17:18 Because what price is the market is 21% earnings growth.
17:21 But at the same time, there's so much liquidity outside India waiting to enter India that
17:25 if instead of 21%, we show up 23% or 25% earnings, the market could touch newer highs.
17:32 So we are at a very fine point where even a small amount of liquidity could cause sharp
17:37 volatility both ways.
17:39 When we define risk in the market, we use standard deviation.
17:43 And standard deviation is a square root of a square, which means that negatives and positives
17:49 get equal weightage.
17:50 So high standard deviation, high risk doesn't mean only downside risk.
17:54 It also means upside potential.
17:56 So fair point.
17:58 So with that in mind, and I'm glad that you set the context with that in mind, let's get
18:03 into the nitty gritties of this.
18:05 Luchi, there's a new investor, there are various options available.
18:10 And usually, I think I've heard people talk about the perfect balance of using passive
18:15 as a strategy, because that helps you cut your teeth, so to speak.
18:19 So what would you suggest an ideal basket is for somebody that's just entering the market
18:24 at this juncture?
18:25 So, you know, I'm depending, obviously, will depend on the risk profile of the investor
18:32 with those caveats.
18:33 Yeah, there's a conservative, balanced or aggressive investor.
18:34 But with all those caveats, I mean, today, I think would be make more sense to be overweight
18:44 on large caps, given the fact that over the last one year, in fact, small cap index has
18:49 gone up by almost 37%.
18:50 And it is right that it's not all stocks that have gone up.
18:55 But the index per se has and mutual funds have a diversified way of exporting, you know,
19:00 sort of investing in these segments.
19:02 So it would be prudent to be a little bit underweight on small caps and mid caps at
19:08 the moment and be overweight on large caps.
19:10 I effectively have noticed that over the last so many years, large cap funds are finding
19:15 it difficult to create alpha and passive investing has really taken in by a storm over the last
19:21 five, six years.
19:22 So index funds make a lot of sense.
19:24 In fact, when you're selecting an index fund, it also makes sense to see the tracking error
19:29 as the lower the tracking error, the better the fund performance would be and will be
19:33 closer to the index.
19:34 So you know, the Nifty 50, Nifty Next 50 are two great indexes to invest in the passive
19:40 side.
19:41 There are conservatively managed large cap funds as well, which I like.
19:46 And you know, so one could include that in as far as the exposure, you may still want
19:52 to not completely ignore the small cap and the mid cap segments.
19:56 So you may still want some exposures there.
19:59 But I would say that they really should be based on the investors risk appetite, if it's
20:03 an aggressive risk appetite, I would still do a little under allocation from this juncture,
20:08 because most fund managers are expecting at least a short term correction, although not
20:14 a long term correction of 10 to 15% in these segments.
20:17 So having said that, I would be underweight on these segments, overweight on the large
20:21 cap, I would take more passive, you know, in the large cap like Nifty 50, Nifty Next
20:27 50, those would be the next 50 index, those would be the two indices today.
20:33 There are some very interesting flexi cap funds as well, which give you an allocation
20:37 to large cap, also some international exposure, which you may want to put in your portfolio,
20:43 but would a mutual fund route, which, you know, would be to a flexi cap.
20:46 So there is, you know, there's one fund in this field, like a Parag Parikh flexi cap
20:50 that I effectively really like, because it gives you international diversification, it
20:55 gives you very value based conservative portfolio on the large cap side.
21:00 Also, like Sunil mentioned, they also be actively using arbitrage to create, you know, dynamically
21:05 manage the positions on the equity side.
21:07 So if they want to go underweight, they have very high arbitrage positions, which I think
21:11 is a very good strategy and again, a concentrated portfolio.
21:15 So those would be a couple of, you know, sort of choices, go overweight on large cap, use
21:20 a certain amount, at least 20 to 25% through passive funds, maybe some inclusion on the
21:28 hybrid funds also makes sense because with the way the debt taxation has changed, you
21:35 know, debt funds have lost their sheen.
21:40 People are taking exposure to the hybrid funds, like an equity savings fund or a balanced
21:45 advantage fund, and those should also be included in the portfolio.
21:48 So obviously the specific allocations will depend on the risk appetite, but those will
21:52 be the segments I would touch to create a holistic portfolio for a starting out investor.
21:56 And as I had said earlier, I wouldn't put all the money in immediately.
22:00 I would take six to eight months to really start getting those investments and, you know,
22:04 build the portfolio constructed over the span of time.
22:07 Okay, fantastic.
22:08 I will circle back to you on a couple of fun names.
22:11 But before I do, Sunil, I want to come to you on this aspect, which is that I see that
22:16 you have an equal weight index as well.
22:20 And when you're talking about passive investing, of course, a lot of people go for the plain
22:25 vanilla, nifty 50, nifty next 50.
22:28 But perhaps they've not really tried to experience these other options that are there.
22:35 What is your opinion in terms of how passive can add to the various dimensions that you
22:42 can build in a portfolio?
22:45 The two things are there.
22:46 One is a plain passive helps you to first of all, buy the market, right?
22:51 If you feel the markets are going to do well, you don't want to either diversify over three
22:54 or four fund managers to get the average of their performances, or you buy the market
22:58 because on an average, two fund managers will beat the benchmark, two will not, right?
23:02 And like Ruchi said, in the large cap space, right, it's probably getting tougher, because
23:07 the inflow of passive funds from overseas and from the provident funds in India is helping
23:12 passive outperform.
23:13 It's like a virtuous cycle, right?
23:16 Because the money is coming into everything that's there, it comes in.
23:19 The second way that passives play a part is to do minor tweaking, which don't need a
23:23 huge fund management experience, like you mentioned, our equal weighted fund.
23:27 So what does that do?
23:28 Like you take the Nifty 50, right, it takes 2% in every stock in the Nifty 50, equally
23:33 weights all the stocks.
23:35 So what it does, it gives you a median, because sometimes some stocks in index run up, and
23:39 others don't.
23:40 And then in life, you know, there's always a catch up.
23:43 So which means that you're always contrarian to some extent in an equal weighted fund.
23:47 So it's a particular way of playing.
23:48 You're saying that, that means the fees are very low, because there's no active fund management
23:52 involved.
23:53 It's just a passive allocation.
23:55 But it gives you a different flavor, because the bank index, for example, is 35% of the
24:00 large cap.
24:01 So you're ending up buying banking, even though you're buying passive.
24:04 If you truly want to buy all segments of the market, an equal weight gives you equal allocation
24:08 to literally everything that's there.
24:10 These are small tweaks.
24:11 You know, as time goes, you will find that other things like a momentum index or a factor
24:16 index, these kind of these are called smart beta products.
24:19 I think Sebi should not allow the word smart.
24:21 They're just differentiated beta products.
24:24 Smart conveys that you'll always be right.
24:26 I think it is not.
24:27 But these are flavors to give some space between active, where you charge one and a half to
24:33 2% fees, and between passive where it's closer to 20 to 30 basis points.
24:37 These will probably charge you 30 to 40 basis points, but give you the tadka, I may call
24:42 it that, is the tadka in your dal.
24:44 And it could also, potentially, it could protect you in the event that maybe the largest constituent
24:52 of the nifty 50 has a bad year.
24:56 You know, you can protect yourself.
24:57 But that is, I guess, for the more nuanced investor that is cut their teeth.
25:01 Now, having said that, you did mention, and this is kind of the close of the conversation,
25:05 because one of the aspects that a lot of people look at is building that contingency fund,
25:09 Ruchi, because that's one of the first steps that you need to take to kind of protect yourself
25:15 from everything that could occur.
25:16 So you're building an emergency fund.
25:18 Now, in years past, we've spoken about liquid funds as the perfect vehicle for this.
25:23 But that, I think, that answer has changed because of the tax change that we saw earlier
25:29 in the year.
25:30 How would you look at this?
25:32 Because you're talking about staggered approach to investing.
25:35 And one other benefit of putting money into liquid funds is that you could use that STP
25:41 route to push money out of liquid funds into the equity fund of your choice.
25:45 And that was a great way to do it.
25:47 What's your answer to this conundrum, looking at the tax aspect?
25:50 You're absolutely right.
25:52 Actually, the market has completely changed after March.
25:56 And while contingency, you know, and today, liquid funds actually post tax are giving
26:01 lower return than even what inflation is.
26:03 So you're basically depleting value of your money to keep money into liquid funds.
26:07 Unfortunately, that's the truth.
26:09 So what's happening is that there are alternatives.
26:11 Obviously, arbitrage funds has been one of the favorites saying that that is something
26:15 that if you're looking to invest or keep your money invested for at least six months and
26:19 more, it makes sense because it gives you similar returns to a liquid fund, but then
26:23 exposes you to equity taxation, rather than a debt taxation, which kind of eats up the
26:28 entire return.
26:30 And also the equity savings schemes, those also have a reasonable amount of exposure
26:34 to arbitrage or, you know, and the liquid side, but again, expose you to equity, equity
26:42 taxation, right.
26:44 So those are options that investors have started looking at and are using to create even the
26:51 contingency fund, a certain amount will always stay in short term debt funds, because that
26:57 is completely safe that has no equity component at all, right.
27:01 I mean, arbitrage funds, even while we do invest in arbitrage funds, we do not advise
27:06 clients who have a very short term view of three months to use that option.
27:10 So you will still have the requirement for liquid funds, but anything over six months,
27:15 these are the avenues that are being used to create that contingency requirement on,
27:20 you know, for short term fall of money, arbitrage and equity savings, because at least post
27:26 tax, they're a lot more efficient than a liquid fund is.
27:29 All right.
27:30 Well, I think we've covered a lot of bases.
27:32 And I think we've hopefully helped our viewers at least the first time investors take those
27:38 first steps a little easier.
27:41 Thank you so much to the both of you for taking the time and for speaking to us here on BQ
27:45 Prime.
27:46 Thank you Alex.
27:47 Thanks.
27:48 Viewers, there you have it.
27:49 That was the Mutual Fund Show for you.
27:50 Lots more coming up over the course of this evening.
27:53 So do stay tuned.
27:54 This is BQ Prime.
27:55 Take care.
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