Of New Beginnings, Predictions, and Investing

As another year comes to an end, there’s an air of optimism. The advent of a New Year… a clean slate, brings with it hopes of a better future, and rightly so. The upbeat sentiment can be all-pervasive. 

For instance, even investors are looking forward to a more fruitful 2023. As is customary, investment experts are foretelling what the New Year bodes—which asset class will be in favour, which sector holds promise, even which stocks can be multi-baggers. 

This is also a good time to introspect. The last few years have been eye-openers: 2020 was marked by one of the worst pandemics in modern times; equity markets both—crashed and rose—sharply. In 2021, the virus caused more suffering, yet markets continued their northward ascent. 2022 will perhaps be remembered for a geopolitical conflict, soaring inflation, and a serious likelihood of global recession. 

No expert predicted these events. To be fair, I don’t think it’s possible for anyone to do so. Therein lies a lesson for investors. Rather than focusing on predictions (factors ‘beyond anyone’s control’), investors would do well to focus on what they ‘can control’. By all means, keep an eye on what experts are predicting, but make investments based on what’s right for you.

The basics of investing don’t change because it’s a New Year. In 2023 too, risk-appetite and goals should guide investment decisions. Asset allocation continues to be as important as ever. 

Also, let’s not underestimate the importance of being resilient. To quote a cliché: ‘What doesn’t kill you, makes you stronger’. Living through the pandemic has likely made us more resilient than we realise. Let’s instil that resilience into our investment decisions.

Let’s be optimistic, resilient, and fundamentally-driven, while investing in 2023. Hopefully, a brighter future awaits.

Happy Investing!

#NewYear, #2023, #investing, #mutualfunds, #recession, #goals, #inflation, #YearEnd

Prashant Jain Quits… An Era Ends

In my nearly twenty-year tenure as a research professional, I have witnessed a host of changes in the mutual fund industry. However, among the few constants has been the presence of Prashant Jain at HDFC Mutual Fund. Jain likely holds the record for the longest manager tenure at the helm of an Indian fund. His exit from HDFC Mutual Fund came as a surprise. 

Despite his constancy, in recent times, Jain emerged as a polarizing figure in the industry. While many believed that he was past his prime, others had steadfast faith in his abilities. And for those who came in late, it was hard to figure out what the fuss about Prashant Jain was.

His research-driven investment approach, valuation consciousness, contrarian bent, and laser-like focus on the long-term, are well-documented. However, Jain will likely be best remembered for his willingness to stick to his conviction. 

Jain was willing to endure long periods of underperformance in pursuit of his conviction. When the latter paid-off, his funds would stage spectacular comebacks. Turnarounds like the ones in 2003, 2009, and 2014, cemented his position as first among equals, in the pantheon of portfolio managers.

Then again, conviction can be a double-edged sword. Admittedly, the last few years have been difficult. From 2017 through 2020, Jain’s funds delivered an indifferent showing. Their asset sizes shrunk, and risk-profiles worsened. As the sheen wore off, expectedly both Jain and his funds were severely panned by the mutual fund ecosystem.

And just when he was all but written off, Jain staged yet another comeback of sorts in 2021. Near-term showing suggests that his funds are topping their respective categories.

But there’s more to Jain’s portfolio manager credentials. 

An integral part of researching and rating mutual funds is expressing an unambiguous opinion. Sadly, a large number of portfolio managers are less-than adept at handling unfavorable views. Jain was an exception. He was always respectful of the analyst’s right to express critical views, even if he disagreed with them.

Jain’s conviction in his investment approach also shone through his personal investments. Even when it wasn’t mandatory to invest in or disclose manager investments, Jain invested millions of his personal monies in funds he ran.

Manager meetings are essential to fund research. Unlike some of his peers, Jain never had ‘no-go’ areas for interactions. 

Oddly my last interaction with Jain was some time ago when I bumped into him at an airport. Though we hadn’t met in years, Jain was quick to exchange pleasantries. He came across as the same affable person I knew, optimistic about the future of equities as ever.

His recent struggles notwithstanding, Jain made a sterling contribution to the mutual fund industry by lending it immense credibility. His exit undeniably marks the end of an era.

Go well Prashant!

#PrashantJain, #HDFCMutualFund, #HDFC, #mutualfunds, #investing, #MutualFundsSahiHai