Welcoming New Year 2017

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Friends,

             

           As we await the New Year 2017 in a few mins, I would like to sincerely thank PenguWIN family of investors for your trust and support. Without a verbose mail (whether it is still verbose or succinct needs to be decided by you), I wanted to highlight a few points.

  • When we started this financial advisory firm in July 2014, I had made up my mind that we will not compromise on business ethics, which is very prevalent in this business, to increase the remuneration. After 2.5 years, I am happy that we have followed this principle strictly and hope to continue this.
  • Currently we work with around 125 investors and about 75 families. Our retention rate has been close to 100%. Nowadays, almost all new prospects come through investors like you and I am glad that a few investors have supported us more than what can be expected from a delighted investor.
  • Given that the Consumer Price Inflation (CPI) has slowed down to 3.35% in Oct 2016, with Bank and Postal interest rates coming down and, Gold and Real Estate returns falling, the inflows from retail investors to equity assets has been on the rise. Though Equity is proven to be the Asset Class that can generate the highest ROI, Indian investors did not have the penchant which is changing now. People have been thinking Equity investments are risky and struck to traditional assets. But the fact is investments in Equity MFs (not direct equities) which hold a large number of stocks across sectors is unlikely to be wiped off. The challenge has been mapping the right product/asset for a specific goal which has spoiled the investor experience in Equity. Equity investments will not be linear and the gains would come in spurts. Hence, time in the market is key (staying invested for long)
  • CY 2016 has not been a great year for Indian Markets with Sensex and Nifty moving up just 1.8% and 2.8% respectfully. The Earnings recovery of companies was supposed to happen in Oct-Dec quarter, but the Demonetization announcement spoiled the show. Initially the support for it from media, public was high as it was a bold initiative which no other PM could have taken. Unfortunately as the show unravelled, in the guise of maintaining secrecy, the implementation was pathetic. As weeks passed, pretty much the entire media and most public started criticising the initiative, tarnishing even the image of RBI. The global media also has been a critic. Demonetisation has resulted in shrinking of the economy and will have an impact on GDP. The economy is expected to come to its original state around July 2017.
  • Last but not the least, Equity MFs are suitable for periods of 5 years and above, except hybrid products like Balanced Funds which can stabilize in about 4 years. The markets will continue to test our patience and we might witness highs and lows. But the final reward will be great and I can say this with conviction, being a beneficiary. A simple indicator for us to relate to stock markets is the growth of the economy. Only when the growth comes down to 1 or 2% with significant number of business running in losses, we have to worry (Even with Demonetization our GDP is not expected to go below 6% for FY 2016-17). Government institutions including National Pension Scheme (NPS) and Employee Provident Fund (EPF) have increased their allocation to equity (the returns from debt products will continue to come down) which itself is a sign of confidence in the stock markets by their boards.

 

<Blog # PenguWIN 1046 – Welcoming New Year 2017>

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