What do you recall about your initial years in the market?
Though mutual funds were there, the broad discussion on MFs started in the late 90s. Investors were introduced to an investing vehicle which promised nothing while they were coming off a very strong fixed income regime. I remember that in ’95-95, good NBFCs were giving 14% fixed return per annum. So, for investors what was being discussed from a mutual fund perspective was pretty alien and that is why they took time to take to the product then. The equity markets were not as structured as they are today and were discussed more for the scams rather than wealth creation prospects. Hence getting investors into MFs then was not an easy job and logically so.
What were the challenges and the pros of a nascent market like India back then?
The first challenge was lack of complete knowledge of the product and capital markets by the sellers themselves. It took us a long time to understand the basics around the whole eco system of investing in capital market and parts of that journey still continues even now.
The second was the absolute lack of risk-taking ability of the investors to invest in anything which came with volatility. We may have progressed a bit but even now we have a very long way to go.
Another important issue was lack of fluid information. Remember, those were the initial days of internet and smart phones were yet to be launched. Information, as we see it now, was unthinkable. This is a business of information and knowledge.
Which was the first bad phase in the market that you remember clearly? How did you navigate it?
The first bad phase was the dot-com bubble in 2000. The basic underlying that technology was the future, was so easy to understand, that it created a demand so big that the subsequent crash was just unbearable. Some MF Tech Fund IPOs (as we called them then) NAVs came down to Rs 2 from the face value of Rs 10. As a sales person then, it was very difficult to face partners and investors. It was the equity market teaching you some very rude shocks and realities together.
Frankly, speaking I did not handle it well at all. It took me at least six months to understand what had happened. The basic rule of being a sales person of sitting in front of your partners and investors, especially when there is a loss of money, went missing. It took me a while, but I did get back to the market after getting a basic understanding of what had happened.
Can you tell us one mistake that you remember clearly from your initial years? What are your learnings from that mistake?
There were big mistakes in the understanding of the business and products on my part, and that came out glaringly to me during the dot- com bubble in 2000. What is perceived to be business of generating returns is actually a business of managing of managing risks dawned very early to me then. One has to understand the risk related to each product and then sell or invest in it. It was the biggest single point learning for me and I am so happy that it happened to me quite early in my career. One has to communicate and understand risk as clearly and fearlessly as one can is what I have done post that.
You have been in the market for such a long time now. Were there any bad phases that made you lose your nerve? How did you navigate it?
There were definitely periods of lows, some pretty extended too. That is how it works and one has to be comfortable with it. Working in our business involves people around you. It is a team game and most of the time, your team pulls you out of your lows if you are honest to them about it. The only thing one can do is stick to the basics always and continue doing everything under your control. Not worrying about what one cannot control comes with experience and time. In our business where the raw material is money, it is more important to first survive. With money one’s integrity is tested every minute and people who survive that test invariably become successful.
How do you see today’s market in context of your own journey?
I think I am extremely fortunate to be in this business at this point of time. The business of investing, both from an asset management as well as from an investor perspective, is beginning to mature. The demography of India is beginning to play out along with a definite to financial assets in investing habits. The young of India are economically better that their previous generation and due to availability of information, they will be more open to risk taking than their predecessors. This gives the possibility of investments in a far wider range of products going forward. With the digitisation and ease of transaction, the inflow of number of investors is set to change. If we as asset managers can keep the sanctity of our products intact, I see huge opportunity of business in the coming times.
If there is one thing that you would want young investors to learn from your experience, what would it be?
\The young should know the advantage they carry due to their age. The sooner they start investing the better it will be for them. I have huge faith in the youth of India as they have access to relevant information and they seem to have the confidence that is needed for investing. They seem to be comfortable with the risks associated with financial investing and this is what will make them superior investors. They should always invest with a goal and plan in mind. They should not hesitate from taking professional financial help from the mutual fund distributors or advisors.