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personal finance | IST

MF Corner: Experts discuss corrections in bull-run, investment in REITs & InvITs

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The market rally over the last year and a half would imply that we are in a bull run, said Feroze Azeez, Deputy CEO at Anand Rathi Wealth. Also speaking to CNBC-TV18’s Sumaira Abidi, Santosh Joseph of Germinate Investor Services said REITs and InvITs are nice paper forms of investing in the real estate sector. They are convenient and easy to choose; easy entry, easy exit.

In this episode of ‘Mutual Fund Corner’, Feroze Azeez, Deputy CEO at Anand Rathi Wealth, spoke about the road ahead for the Nifty after 18k.
Azeez said, “Whenever we look at the markets, it is very important to broadly classify the markets to be in a bull run or sideways or a bear run. In the current situation, of course, the market rally over the last year and a half would imply that we are in a bull run. The four attributes of a bull run, which have helped in the last couple of decades to identify those periods clearly indicate that it is actually a bull run. The four attributes to my mind are return, earnings, interest rates and the GDP growth expected. These four can give you a sense of whether it is a bull run as long as these variables are greater than the long-term averages.”
He added that corrections are bound to happen because in bull runs participants get excited, resulting in exuberance. Then there would be some retracement as things progress. "So, I would say, corrections are a part of the bull run, but the bounce backs are going to be very swift,” he said.
On investing in mutual funds, Azeez said, “A person needs to remember that mutual funds, if you look at the last 20-year data, have fallen marginally less than Nifty. Nifty is a very broad-based index, which is resilient to falls, beyond much lower than stocks could bring down the value. So, point one, if you are owning stocks, you have to expect larger volatility. A Nifty has low volatility than stocks. Of course, and then mutual funds have actually had 2-3 percent lower falls in the last 20 years during periods of correction.”
He added, “The time it takes to retrace back to the peak, which is what is the painful period for an investor to see his portfolio off the peak, is significantly lower in the case of mutual funds. It took 299 days for the Nifty to retrace back to the peak of a specific year. But in case of mutual funds, it retraced in 208 days. So, it saves the investor three months of painful negative on his portfolio.”
Also, CNBC-TV18’s Sumaira Abidi spoke to Santosh Joseph of Germinate Investor Services to understand REITs and InvITs.
Joseph said, “A lot of investors are looking at investing in real estate in a more meaningful way and they like it to be in a nice package solution, much like how mutual funds are today. So, we have REITs - Real Estate Investment Trusts or InvITs - Infrastructure Investment Trusts. Now, both these give individual investors extremely organised access and entry into the massive real estate play that is at hand in a developing and a fast-growing emerging economy like India.
He added, “Many investors cannot do it on their own or the scale is not possible for them to execute this kind of real estate investments. That is where REITs and InvITs come into play. In REITs, you can invest in large-scale commercial properties, where these trusts earn an income at a trust level by leasing, renting or even selling properties. Similar is InvITs, which are infrastructure trusts. The difference between the two is very minimal. One is investing in largely commercial properties, the other invests in infrastructure projects like roads, highways, ports, bridges, power plants and so on and so forth.”
He added, “Now, for investors who are seeking to invest in real estate, this is a nice paper form as well as convenient and easy to choose; easy entry, easy exit, these are extremely liquid and listed on the stock exchanges, a boon for people to invest in Indian real estate without getting their hands wet.”
Watch accompanying video for more.