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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Some points from meeting with Prashant Jain

Posted by Muthu on July 4, 2015

Few days ago, I had an opportunity to attend an interactive session with Prashant Jain, one of the best fund managers in the country. I’m sharing below some of the points he mentioned in that session.

1) We are happy with what government has been doing so far. It has taken lot of right steps. Number of stalled projects is coming down. Increase in MSP has been in the range of 2% to 3% instead of 8% to 12% during the previous government. Fiscal deficit would be 3% in next 3 years.

2) Investment cycle has two components – infrastructure and industrial capex. Infrastructure capex has already started picking up. Benefits of this would be seen in the due course. This growth cycle would primarily led by the infra capex.

3) We are moving towards a low inflation regime which would last for next 5 to 10 years. We expect the inflation be to around 5% or less. Interest rates would settle marginally higher than inflation. Low interest rate would lead to good performance of bond funds for next 5 years.

4) From next year, for subsequent 3 years, we expect the earnings growth to be around 25%. This would lead to good performance of equity for next 5 years. In short, for next 5 to 10 years, we see a bright future for both debt and equity market.

5) For the last 2 years, the credit upgrades are more than the credit downgrades. We don’t expect NPAs to detoriate any further.

6) For the last 4 decades, the economy has grown at a nominal growth rate of 15%. Sensex has delivered around 17%. Good funds have been able to generate an alpha of 5% or more. This would continue to be the case for next 10 years as well.

7) $40 billion is the floating stock of midcaps. Out of the $10 billion received as equity inflows by mutual funds during last one year, $8 billion has come into midcap funds. Totally $20 billion has gone into midcaps. The midcap performance of last one year cannot be repeated. During next 2 years, large caps would outperform midcaps. In the long run (say 10 years), performance of all kind of caps would be in line with their earnings.

8) As a fund house, we don’t chase momentum. We sold technology stocks in late 1999. We were not in real estate stocks in 2007. While investing in funds, don’t keep chasing recent performance. Look for funds which beat benchmark over a 10 year period. Don’t keep switching between funds.

9) FIIs have bought $154 billion of Indian equity in the last 23 years. From 0% stake, they hold 23% of our markets now. In the same 23 year period, Indians have bought gold worth $245 billion. We’ve sold 17% CAGR asset to buy a 9% CAGR asset. Be intelligent and invest in equity.

5 Responses to “Some points from meeting with Prashant Jain”

  1. Hi Muthu,

    Thank you for sharing some insights from fund managers like Mr. Prashant Jain. It is absolutely true and an interesting read.

    I have also been reading about your various articles which states that 18% CAGR would lead to phenomenal returns over longer duration (20 years). Can you give examples of investors reaping benefits out of 10 years and 15 years and the CAGR / number of times the money has grown. I agree with you that power of compounding works wonders but only want to know the number of times money getting multiplied as I have not yet experienced it.

    In one instance, you mentioned that if one invests Rs.1.23 lacs per month for 20 years, the investor can earn Rs.100 crores. It is truly astounding to hear such returns. I am only wondering if it really works to such a great extent.

    I am shortly going to start distributing MF products and would like to emphasize the importance of investing for long term as you have always been communicating to your readers. I would simply be following your advice.

    Regards,
    Venkat

    • Muthu said

      Please see valueresearch for funds which have completed 15 or 20 years. There are many such examples. All the very best for your MF advisor career.

  2. isha said

    Nice article

  3. hcparekh said

    No more stalled Projects ?

    Here is one of the things that I think is needed :

    Treat MII ( Make In India ) on par with MOM ( Mars Orbital Mission )

    We have all seen MOM control room on TV , with dozens of scientists glued to respective computer screens , monitoring every aspect of the Mission

    And , whenever required , taking ” Course Correction Actions ” in real time

    For MII ( Make In India ) too , we need such Control Rooms

    One at the HUB (in DIPP ) and 20+ SPOKES (one each in State Capitals )

    The concerned officers will monitor :

    > WEB SITE TRAFFIC

    Who is visiting from where and looking at which pages , and doing what , and for how long …etc

    > MESSAGE TRAFFIC

    From server log of B2B web site , monitor which FOREIGN COMPANIES are blasting ( We are interested in a JV with you / We want to buy from you ) messages to which INDIAN COMPANIES

    > ACTION TRAFFIC

    B2B server sending out ( within ONE MINUTE ) , full details of above-mentioned messages to,

    * Indian Diplomatic Missions abroad to get in touch with the Message-Sending FOREIGN COMPANIES , offering instant help

    * Chief Ministers / Industry Ministers / Industry Commissioners etc of the STATE GOVERNMENTS , where message-receiving INDIAN COMPANIES are located ( expect a fierce ,healthy competition amongst States to locate project in their States ! )

    > PROJECT MONITORING

    Implementation of each project ( above a certain value ) being monitored using PERT technique – thru a specific Mobile App installed on the cell phones of concerned Government officers

    To make MOM a reality , cost the country , some Rs 430 Crores – and time of some 100 scientists

    I believe CONTROL ROOMS ( War Rooms ? ) of Make In India , may not cost more than Rs 43 Crores ( – all put together )

    And some company like Infosys / TCS / Wipro , will be able to construct – and operationalize – such rooms ( hardware and software included ) within 3 months

    Given the challenge to raise our ” Ease of Doing Business ” rank from 142 to 42 , this is the surest / fastest / cheapest method !

    —————————————————————————-

    hemen parekh
    14 July 2015
    B2BmessageBlaster

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