What is the benefit of staying invested in the long term?

Invest for long term – an advice routinely given by many Mutual Funds distributer like me, This is especially true in case of certain Mutual Funds – such as equity and balanced funds.

Let us understand why the professionals give such advice. What really happens in the long term? Is there a benefit of staying invested for long term?

Consider your Mutual fund investments as a good quality batsman. Every good quality batsman has a certain style of batting. However, each good quality batsman would be able to accumulate lots of runs, if he continues to play for years.

We are talking about the record of a “good quality” batsman. Every good batsman would go through some good and poor performances. On average the record would be impressive.

Similarly, a good Mutual Fund would also go through some ups and downs – often due to factors beyond the control of the fund manager. An investor would benefit if one stays invested through these funds for long periods of time.

So, as long as you can afford, stay invested for long periods of time – especially in equity and balanced funds.

How am I reading the situation?

I have been expecting volatility in the markets. In the last 6-8 months, i have been advising to be cautious with our asset allocations while i am keeping a razor sharp focus on improving the overall quality & risk-reward of our investment portfolio.

Markets are never static and always have a significant emotional quotient. I understand that and try to navigate risk and returns continuously across the continuum of the cap curves and sectors available. 

Young investors entering the equity markets for the first time also heightened the bullishness in the market. 

Mutual funds have been asked to monitor the liquidity profile of their portfolios carefully and come up with strategies to counter sudden liquidity

issues that may arise.

Macro backdrop for corporate India has never been more favourable. With India’s fiscal deficit and current account deficit under check, capital

costs continue to remain benign.

Corporate India has a good balance sheet and with the Make in India campaign, we are witnessing a recovery

in manufacturing, which favours midcaps and small caps more as they tend to supply global vendors from here. 

Multiple indicators were endorsing the fact that from a medium-to-long-term perspective, value stocks, which had so far traded in the neglected territory, will now be market outperformers in absolute as well as relative terms. any further up move and this outperformance would eventually signify preference for value stocks. According to my reading multiple indicators are now pointing to an amplification of the value thesis at a much larger scale as we are at an inflexion point. I am now seeing that the stocks in admired territory are undergoing a correction, while stocks in neglected territory are seeing a rise in valuations.

My understanding is emphasizing that this trend will perpetuate going forward.

I would like to

⇨ Add more to the investments during corrections as it helps in higher returns, when market (/ Portfolio) recovers.

⇨ During corrections, instead of Timing the Low, which is near impossible, plan your investments in a staggered manner for certain %-age of correction.

⇨ Keep a SIP … it really helps in building your goal-kitty and wealth over years.

⇨ Asset allocation plays a vital role in the larger scheme of things.

⇨ Rebalance the allocation in times of need (like a sharp rally in equities, deep correction in markets, other assets, etc).

Please call me for detailed discussion and investment opportunities.

*Views are personal & not for any recommendation/endorsement.*

Happy investing!!

Regards,

Ritesh Sheth CWM®

(Chartered Wealth Manager)

Amfi registered Mutual fund distributor under ARN-0209 EUIN- E030691.

ARN Date of initial registration - 16-AUG-2002

Current validity of ARN upto - 01-10-2029

*Mutual fund Investments are subject to market risk please read the offer documents before investing.*

Investments in India for NRIs in USA/ CanadaIndian

NRIs based out of US and Canada can invest in Indian mutual funds. However, AMCs do not have a uniform policy to deal with US and Canadian clients.

Currently, close to 14 fund houses receive investment from investors based out of these two countries and another five AMCs receive investment only from US.

Broadly, there are two categories of fund houses here - where investors are not required to physically present in India and vice versa.

Here is the list of fund houses where investors are not required to be physically present in India:

Aditya Birla Sun Life Mutual Fund

Nippon India Mutual Fund

Quant Mutual Fund

Sundaram Mutual

UTI Mutual Fund

Interestingly, these fund houses allow such NRIs to invest in their MF schemes without any restriction that too through online transaction.

Let us look at the fund houses which insist NRIs to be physically present in India:

360 One Mutual Fund

Axis Mutual Fund

DSP Mutual Fund (Only lumpsum)

ITI Mutual Fund (Only lumpsum)

Kotak Mutual Fund

Navi Mutual Fund

NJ India Mutual Fund

PPFAS Mutual Fund

SBI Mutual Fund

Taurus Mutual Fund

White Oak Capital Mutual Fund

Similarly, here is the list of fund houses, which receive money only from US investors:

Bandhan Mutual Fund (Only US)

Edelweiss Mutual Fund (Only US)

HDFC Mutual Fund (Only US)

ICICI Mutual Fund (Only US)

Motilal Oswal Mutual Fund (Only US)

Please note that all these fund houses receive investment only through physical mode. 

Also, these fund houses insist NRIs to submit application form along with a declaration form indicating their residential status.

NRIs residing in US and Canada will have to share Foreign Account Tax Compliance Act (FATCA) details and tax identification number (TIN) along with KYC details.

FATCA declaration form captures information like type of address (residence, business, registered office etc.), country of tax residence, tax identification number, Global Intermediary Identification Number (GIIN) and seek investors consent for sharing the information with relevant tax authorities.

For KYC, 

NRI needs to be physically present in India for KYC.

here is the list of valid KYC documents:

PAN card

Overseas address proof

Passport

Passport size photograph

OCI Card (In case of foreign passport holder)

For transaction, an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account is a must.

Hope i have addressed Common questions/query receivedfrom US and Canadian NRI. 

Please note this blog is on the basis of best efforts basis. Request reader please connect with your financial advisor or mutual fund companies for proper guidance.

Regards 

Ritesh Sheth CWM®

Disclaimer:

The views are for personal use and for educational propose only. Ritesh Sheth & Family or Tejas Consultancy does not guarantee the accuracy, adequacy or completeness of any information in this emailer and is not responsible for any errors or omissions or for results obtained from the use of such information.

This BLOG is addressed to and intended for the investors of Ritesh Sheth & Tejas Consultancy only. You are advised to contact Ritesh Sheth & Tejas Consultancy to clarify any issue that you may have with regards to any information contained in this blog. Ritesh Sheth & Family or Tejas Consultancy does not have any liability to any person on account of the use of information provided herein and the said information is provided on a best effort basis. In case of investments in any of our schemes, please read the offer documents carefully before investing.