Choose the right blend of pure equity and hybrid investment products, says Sunil Subramaniam, Managing Director and CEO, Sundaram Mutual Fund

Given the positive market scenario that exists today and the possibility of the government’s focus on infrastructure development, Sunil Subramaniam, Managing Director and CEO, Sundaram Mutual Fund, shares some significant suggestions for investors

As the leader of Sundaram Mutual Fund, how would you describe the company’s investment philosophy, and how does it set you apart in the industry?
‘Unearthing Opportunities’ for investor wealth creation is our tagline. We use a strong growth plus quality framework for identifying opportunities which can play out over a 3-5 years' timeframe and do not simply follow the market ‘flavour of the moment’. We use our own ‘six pillar framework’ for stock selection and ‘buy, hold or sell’ decisions. This is what differentiates us.

How do you see the Indian market performing in 2024? Which sectors do you believe hold the most promise for investors in the current environment?
We see the Indian stock market as range-bound in the calendar year as the good economic outlook for India will continue but the good news and the expectant return of the NDA to power seems to have already been factored into the prices. The uncertainty will be around crude prices, monsoon prediction and the US elections – hence a normal return in the low double-digits is what should be expected, barring external shocks. Sectorally, the continuance of the good business cycle will mean that manufacturing, banking and financial services will be the beneficiaries while consumption and broader services present opportunities from a valuation perspective.

What are you seeing as the primary drivers of economic growth in India? How will this translate as an opportunity for investors?
The primary drivers for growth are the ‘demographic dividend’ which will put pressure on reforms to meet the phenomenal employment need and hence the ‘China + 1’ opportunity being capitalised through the PLI and the government’s infrastructure push will lead to a manufacturing boom in the economy, and consequently in the stock market too. The continuing digitalisation and formalisation process and the start-up boom will also drive a strong catch-up story in the stock markets for the services sector.

How do you expect inflation and interest rates to evolve in the coming months? What impact will this have on asset allocation and investment strategies?
We expect inflation to hover in the range of 4.5-6 per cent and hence expect a stable interest rate scenario domestically. Internationally, however, there could be a prolonged rate cut cycle. So from an asset allocation perspective, we believe hybrid schemes such as BAF and multi-asset allocation funds with significant gold allocation will be the ideal vehicle for most investors.

How is technology transforming the mutual fund industry, and how is Sundaram Mutual Fund adapting to these changes?
Technology has already been having an impact on the business development side with ease of investing and research for mutual funds improving tremendously. Sundaram Mutual Fund is already well-entrenched to capture this with both Android and iPhone apps as well as a distributor-initiated transaction journey in place. During the year, we will invest in improving these interfaces and enhancing the user-friendliness aspects. The use of AI on the investment side through ChatGPT, etc. is in the initial stages and we will be constantly evaluating the potential during the course of the year.

What are the biggest challenges you see for retail investors in the Indian market? What role do you believe financial institutions like Sundaram Mutual Fund play in promoting financial literacy and responsible investing?
The biggest challenge for retail investors is the tendency to chase past returns and believe that the good times will last forever. Economies and markets inevitably go through business cycles and the element of fear and greed results in fluctuating performances. Therefore, financial institutions such as ours play an important part in advising and educating investors to use financial planning, goal-based investment and asset allocation as important tools in the process. We propose to do this through continuous investor education programmes.

Lastly, what advice would you give new investors aspiring to create long-term wealth through mutual funds?
Understand your risk appetite and choose the right blend of pure equity and hybrid products. Accordingly, diversify across the capital curve and across sectors, use SIPs as your primary investment methodology and link each investment to a clear ‘non-stock market-related’ goal, and, last but not the least, ruthlessly redeem your investment when your goal is achieved.