The debate between active and passive investment strategies is not new. Many investors are unable to decide which investment route to adopt and how much weightage should be given to which style to build a balanced portfolio.
To help investors make an informed decision, Mahindra Manulife Mutual Fund (MMMF) and Moneycontrol hosted a special webinar on active and passive investing strategies where financial experts Ashutosh Bishnoi, MD & CEO, MMMF; and Krishna Sanghavi, Chief Investment Officer-Equity, MMMF shared insights with CNBC-TV 18’s Sumaira Abidi on the performance of active vs passive funds in India, current and future market trends, what investors can expect while investing in both portfolios, with a special emphasis on the active side.
During the engaging conversation, Bishnoi said the Indian scenario warrants a different look in the active Vs passive debate. He said ETFs and passive funds in India are brought to the market by managers who already have a full basket of active funds and hence exist as a melange, unlike the US where fund houses differentiate themselves as either active or passive.
“In India, if you have already got every type of possible funds, what new product are you going to get into the market? In terms of market maturity, when passives become very valid is, when the market participation is so high, that producing alpha becomes near impossible. In India, we are far away from that and will take market maturity,” said Bishnoi.
The experts also spoke at length about managing active funds in India, alpha generation and its linkage with the Indian economy, opportunities in active space and much more. They also discussed different categories, funds, how investors should get comfortable with equities first, understand the nuances and then seek help of a fund manager.
Exploring more about categories, the panellists delved into the flexi-cap category and the role of New Fund Offerings (NFOs) as a critical instrument for active management. Sanghavi said the flexi-cap funds are a perfect instrument for a manager who can make the right investment decisions on both stock selection and portfolio construction using different variables at play.
“Flexi fund as a category captures a wide market spectrum, allows fund manager real flexibility to move into a market cap of his choice and aids in intelligent stock selection taking into consideration several factors,” said Sanghavi.
The experts also discussed the scope for innovation in the Active and Passive space and way forward.
Watch the full webinar here:
Moneycontrol journalists were not involved in the creation of the article