New-age firms coming up with IPOs and listing on Dalal Street is a sign of how the Indian economy is evolving, said Radhika Gupta, MD & CEO, Edelweiss Mutual Fund in an interview with Kshitij Bhargava of Financial Express Online. She added that investors need to keep an open mind when investing and valuing such companies. Radhika Gupta further said that there will be more new-age companies knocking on the doors of primary markets in times to come. She also shared advice for new investors looking to enter the world of investing in 2022. Here are the edited excerpts.
In 2021 we saw a large number of IPOs and questions were raised on the valuations of these new-age companies. How do you see them?
The IPOs of new-age companies have been on our mind in 2021 and if you think this is going away, it is not. New companies, newer models are going to list and that is a sign of an evolving Indian economy. Saying that all these companies are loss-making, it doesn’t work like that. The other thing is that you can’t just say all these companies are good. So we need new ways to understand these companies, and to value these companies; and we need to keep an open and honest mind when understanding these companies.
The new retail investors who entered D-Street in 2021 have not seen many corrections, do you think small investors vanish if markets correct sharply again?
This always happens. I think large rallies are followed by people who come in and take more risks than they should. Then there are corrections that spook some people and they leave but a lot of people stay. I think now there is information out there and there are resources and I want to say that I hope people have evolved and developed patience but I think corrections are an important part of long-term equity investment.
What is your advice for new investors who came in 2021 and those who will open Demat accounts in 2022?
Starting is important and kudos to them for starting this journey. Young investors need to develop a sense of goal. It is a FOMO-driven world so having a sense of a goal is important. Secondly, accumulating the right investing knowledge is important. There is so much knowledge out there but I think developing your own sense of knowledge about basic things is very important.
Does the mutual fund industry need more products to attract investors?
I don’t think the industry needs more products. I think what we need is to find more ways to make sure that the same products reach more consumers. Dal and rice is something that the whole of India consumes, be it rich, young, or old. I think there are mutual fund products that have the same characteristics, we just need to package them and make sure that we focus on simplicity and make sure the simplicity is appealing for the people.
In 2021 SIP inflows reached record highs, what’s keeping these flows so good?
Obviously flows have been robust on the back of strong markets. But I don’t think SIP is about returns, it is a way to enable an ordinary investor to save for a goal in a disciplined manner. I think people have now embraced it and have realized that SIPs can enable goals.
In 2021 we saw the rise of Cryptocurrencies as an asset class, what are your views on this?
I’m not an expert on crypto and I know it has become extremely popular but I would only encourage Indian investors to invest in asset classes that are regulated by the government and the authorities.