Despite a 4% correction in the market this month, Vetri Subramaniam, chief investment officer, UTI AMC believes this is not a time to take more risk. He tells Vivek Kumar M that earnings estimates for FY25 could go awry if the September quarter numbers continue to be below expectations. Excerpts:
Markets have corrected by around 4% this month. Should investors see this as an opportunity?
This is not the time to take more risk, and definitely not the time to seek higher returns by being aggressive. This is the time to ask why did I start investing? What is my financial goal? What is my asset allocation and am I in line with that?
We find that many people have raised their equity exposure quite significantly either because they have put new money into the market or their equity portfolio due to mark-to-market has gone up and therefore, it is higher than their original target. We have been saying for the last year that go back to your original target. At these valuations, in some sense, your current returns include a component of what would have been your future returns.
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Have you changed the weight of equity in your hybrid funds, given the changing market dynamics?
Firstly, we find hybrids to be a very good solution in this market. There are different kinds of hybrid funds. In aggressive hybrids, there is fixed asset allocation. But when it comes to dynamically managed or balanced advantage funds, the equity allocation can be anywhere between 30-90% based on the strategy.
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In our aggressive hybrid, we will not cut equity allocation. But in our balanced advantage fund, when we launched it in July 2023, equity exposure was 65%. Today, it has come down to about 45-47%.
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