Knowledge Faqs with Gaurav Jain (Knowledge Yagya 12)

6 min read
Here are some questions asked by the viewers in the Yagya dated 28th September 2021. These questions can provide you with insights on some grounds. Please read these questions for knowledge purposes only and make any investment decisions only based on your research or the advice of your financial advisor.
Q  ​Do we need diversification in debt funds? Or is it good to put all my money in 1 fund, if the time horizon suits that fund?
Gaurav Jain

• Mostly one or two funds are more than enough for the debt fund.
• This depends on the corpus that is available and what is the asset allocation.
• One fund is good to invest in. If diversification is required then opting for 2 funds should also be good.

Q  ​ ​Which one is better in terms of safety and returns, ICICI Short Term vs ICICI Corporate Bond?
Gaurav Jain

• Most Likely corporate bond is good. But it is a tough decision.
• In short term, there are more chances of credit risk.
• In the corporate bonds, the credit risk is low.

Q  ​ FIVE Learnings of investing from COVID?
Gaurav Jain

1) Don’t do anything:
• On 23rd March 2020 when the market was all-time low where Nifty was around 7600 and Sensex was around 27000-28000.
• Most of the people were had a question about withdrawing the money from the market. It was always suggested to all the people that if you don’t want to put money it is fine but at least it should not be withdrawn if it is not required.
• At that time when people lost their jobs at that time people who needed money for their livelihood were suggested to withdraw.
• Otherwise, it was recommended to buy and hold. This was the best example that was seen in the last 1 year.
• Sometimes the best strategy is not to do anything.
• To make it better it is better to manage the asset allocation, you can improve the equity allocation.
• As there was scare in the market that a large number of people will be infected.

2) No one can predict the market in short term:
• People were often waiting to happen. When the Nifty had reached 7500 to 10000 it was assumed that the Nifty can come back to 7500 when covid was not over yet.
• Many people also stopped their SIP and will start investing when the dust settles.
• Most of the people said they will invest when the vaccine comes.
• As it was seen how markets grew in last one and half years.
• No analyst has predicted the within one and half years the market will reach its all-time highs.

3) Use of Emergency fund
• It is always recommended to all that a sizable amount should be allocated to an emergency fund.
• If the job is stable then at least 6 months of the expenses or at least 12 months of expenses should always be an emergency fund.
• So most of them have kept the investment in equity which is not correct as some amount should be kept as the emergency fund.

4) Diversification
• It is important to do the diversification. It is also important to have the sector diversification and in the asset class as well.
• Most of the time it was felt that allocation in gold, debt, REITs also some international stocks is important.
• This diversification will be different based on the risk profile.
• It helps in building a good portfolio in those times.
• It is also important to look over the portfolio whether it is over diversified or rightly diversified.
5) Technology
• It is seen that we are moving towards by highly technology-driven society.
• The technology integration had happened in 4 – 5 years before because of work from home.
• It is also seen the technology-driven startups like Zomato, IPO of Paytm which will be coming shortly, etc.
• The technology-driven startup is going to come and will do it very well.

Q  Long term investor with the vision of 20 years, purchased fundamentally good stocks how important is technical analysis while getting exit?
Gaurav Jain

• If there is a vision of 20 years, then there is no requirement for technical analysis.
• The horizon of technical analysis is generally in days, weeks, or months majorly.
• If there is a horizon of 6 months to 1 year it may be of some help but technical analysis is not suggested by us.

Q  Retired person with a corpus of Rs. 50 lakh, what options do I have for regular pension 8-10%? Can’t take annuity plans as no return of capital?
Gaurav Jain

• Taking an annuity plan is not a good option.
• To bet the inflation by 8%-10% there is no option other than equity.
• From our point of view, the equity’s expectation will be around 12%. So we take hybrid funds, index funds, gold, etc.

Q  View on bajaj finance for the long term?
Gaurav Jain

• It is a good company.
• This company is on the aggressive side.
• There are risks associated with consumer finance.
• It is on a high-growth path.
• There are a lot of good things in that company.
• The entry can be taken if the investment is for the long term.
• If invested need to invest in a staggered manner.

Q  View ABSL Tax Relief 96 with a time horizon of 10 years?
Gaurav Jain

• It is MNC related fund. Major investments are of MNCs.
• They have not performed as compared to domestic companies.
• It is a moderate type fund.

Q  View Gland Pharma as SIP Stock?
Gaurav Jain

• This company is in a very good space.
• Injectable pharma is a good space that is growing.
• People are moving towards injectable as it is a more effective medium of medication.
• It is having very high growth.
• The only problem with this is the Chinese promotor.
• The Pharma industry is not cyclical but it has happened due to COVID.
• It is dependent more on exports and other country regulatory policies.

Q  What needs to be done as it is told to invest in equity MF for long-term goals and it is also told to do asset allocation? How do we achieve and realize our financial goals if we carry out asset allocation and shift funds from equity to debt and once we achieved have growth in the stated period?
Gaurav Jain

• If the expectation of returns is achieved before the tenure. Then it is required to manage the debt allocation as well.
• The portfolio should be done with some thought process of asset allocation and financial goal thought process as well.
• Asset allocation is good when the expectation is very low.

Q  View on City Union Bank?
Gaurav Jain

• City union bank is a decent bank with having a greater presence in Tamil Nadu.
• They are more focused on gold loans.
• The expectation of growth is very high then it is not that kind of company.
• It is stable small and mid-cap stock, having decent governance.
• Gross NPA’s are on higher levels.
• It is not at the level of Kotak’s and HDFC banks.

Q  Restricted the portfolio in 12 stocks but IPO and digital stocks are very tempting?
Gaurav Jain

• It is the game of risk profile.
• If the person is a stock investor then it’s a hands-on investor.
• The new IPO and digital stocks that are coming are landscape-changing IPOs.
• One should look into his/her Risk Profile before adding any IPO or Digital Stocks to the portfolio.

Q  view on IDFC First Bank and Laurus Labs at current prices?
Gaurav Jain

• In IDFC first bank governance is very strong.
• When the governance is strong the other factor carries away with that.
• Still, there is an issue with Vodafone Idea.
• This is a good stock for aggressive investors.
• Laurus lab is in an API business.
• Looking at the current price pharma industry has already gone up.
Laurus Lab’s growth was amazing but its continuity is questionable.
• Regulatory risk will be associated as this is an export-oriented sector.

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