Don’t look at equities from one-month or one-year perspective, says Roshi Jain of Franklin Templeton Mutual Fund

Last two years have been extremely volatile for the equity market. Most naive equity mutual fund investors are finding it difficult to make sense of the volatility in the recent times. Roshi Jain, Vice President & Portfolio Manager, Equities, Franklin Templeton India AMC, shared some rules for the novice investors to ride through the volatility easily.

“Don’t look at your equity investments from a one-month or one-year perspective unlike debt which gives you regular annual returns. Equities is different,” said Roshi Jain. She was speaking at the ET Wealth Investment Workshop held in Chennai on November 15.

She explained with a simple example why a short term perspective in equity investing is a bad idea.

“We tend to look at the average returns of, say, last three years. Suppose its 10%. But the returns may not necessarily have come like 10, 10 and 10 in the last three years. It could be a case of 30% returns in one year and 0 in the other two years.”

With the example, Jain also tried to explain to the participants that equities will not give you steady returns.

“But at the same time if you look at the longer horizon, returns generated by equities will tend to beat debt and inflation if you are in the right sectors,” Jain added.

Jain asked the participants to create a framework of where and why they want to invest and then stick to it unperturbed by the shocks in the short term.

“You need to have a framework, ensure you stick to that framework, don’t look for verification every three or four months. We need to move beyond looking at it on a day to day basis,” said Jain at the workshop. “If you check last five years, any good fund would have made 11-12% on an annualised basis at a time when the earnings growth in most businesses has been were very weak,” she added.

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She told the participants that some sectors might take some more time to work, but investors must be disciplined in their approach and keep invested for the long term.

“Don’t believe in someone telling you that this sector will be up 20% in a week. Stay away from such tips. Be disciplined. Be diversified,” said Jain.

Jain also reassured the participants that depsite all the gloom Indian stocks would reward them over a long period. “The Indian stock market is going through a period of readjustments. We have a strong base.”



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