AgenciesTo that effect, we plan to launch dollar-denominated products shortly from our Gift City office, allowing investors to benefit from exposure to US dollar-denominated assets by investing in these products.
In a rapidly evolving global market landscape, traditional equity investing alone may not be enough to meet long-term financial goals.In this edition of ETMarkets Smart Talk, Harshad Patil, Chief Investment Officer at Tata AIA Life Insurance, shares his insights on why investors need to look beyond conventional equity exposure.From the importance of hybrid funds to the rising relevance of global diversification, Patil lays out a clear roadmap for wealth creation amidst volatility, shifting interest rate cycles, and geopolitical uncertainties. Edited Excerpts –Q) Thanks for taking the time out. June is turning out to be a volatile month for D-Street. How is 2H2025 likely to pan out for Indian markets? Do you think most of the negatives are behind us?A) In these volatile times, it is challenging to predict the outcomes of any positive or negative developments as there are large moving parts, some of which are quite unprecedented.Live EventsMoreover, considering the pace and the intensity of events over the year thus far, it is difficult to say whether all the negatives are behind us.However, we believe that India is an oasis of growth in an otherwise slowing global economic landscape. India continues to be the fastest growing among the Top 10 large economies this year as well.The Indian economy has experienced macroeconomic stability, characterised by contained inflation, a reduced fiscal deficit, and a manageable current account deficit.All these factors bode well for the markets and should be reflected in the market performance for this year.Q) What does a 50-bps cut mean for equity and bond markets? What should be an asset allocation strategy?A) The rate cut would help stimulate growth and help the overall consumption demand, especially in the discretionary space, by reducing borrowing costs. The rate cut itself was based on soft inflation prints, which is another positive for consumption, as it increases the purchasing power of consumers.By reducing the cost of funds for corporates, it lowers the hurdle rate for new capital expenditure projects and serves as a catalyst for reviving private capital expenditure.Regarding asset allocation, we have consistently maintained that an investor should maintain an asset allocation in line with their risk appetite, ensuring that key long-term financial goals can be met.Q) How do you see alpha-focused strategies playing a role in helping investors?A) Alpha focused strategies have worked across time frames to deliver outperformance as against the broader market benchmarks.Creating a portfolio of stocks across diverse sectors is especially beneficial in a market as diverse as India, as the Indian market offers opportunities across multiple sectors.We believe that a portfolio of Alpha-generating stocks that are periodically rebalanced offers this opportunity to tap the Indian growth story effectively. Tata AIA is offering the Top200 Alpha 30 fundQ) What is your take on Q4 earnings from India Inc.? Any hits and misses which you tracked in the results?A) The Q4 results for India Inc. saw moderation in growth and earnings remaining in single digits, which was largely on expected lines.We believe sectors like financials were positive, driven by moderation in credit costs, as the asset quality in the banking system has held up well.Additionally, there were positive sentiments regarding the nascent rural demand, which was a welcome surprise, even as overall consumption growth remained slightly subdued.Q) Nifty Bank hit a record high in June which suggests that there is a lot of interest in banking stocks. What is fueling the rally in financials – is it the rate cut by the RBI?A) We believe that rate cuts will stimulate overall demand and thus accelerate the credit growth. Also, with credit costs moderating, it offers multiple tailwinds for the sector as a whole.Q) Which sectors are likely to remain in limelight in the 2H2024?A) In such a volatile market, on the back of heightened uncertainty in global trade due to ever-changing tariff policies, it is difficult to predict the sectoral behaviour of the market.Moreover, the geopolitical tensions inject more uncertainty and cloud the earnings visibility in some sectors.However, we continue to believe in bottom-up stock picking, with a focus on quality, and always look for opportunities across various sectors. This approach has been highly effective for us over the years.Q) Are there any underappreciated segments or emerging themes that you believe investors should keep an eye on?A) In recent times, we have seen a host of emerging themes that have caught investors’ fancy, be it the capital markets space, or pockets in the travel and tourism space.We continually seek out such opportunities and have been early investors in many such themes over the years.Q) From a long-term investor’s perspective, why is it important to move beyond traditional, broad-based equity exposure?A) We believe that investors should always look to invest across asset classes depending on their risk appetite. We at Tata AIA offer our policyholders a range of products across the risk spectrum, spanning asset classes of equity and fixed income.We also offer a set of hybrid funds with a varying mix of equity and debt, catering to both conservative and aggressive investors seeking long-term wealth creation.Q) The tonality keeps changing from the US when it comes to ‘Trade Talks’. Do you think it is still a relevant headwind for equity markets across the globe?A) We believe that geopolitical uncertainty is likely to persist in the near term, whether related to trade or other issues, and this is likely to create volatility in global flows, thereby impacting markets.However, we are convinced the markets offer ample opportunity for investing even in these volatile times, and investors must stay invested and make use of these windows of opportunity to create wealth in the long term.Q) China equity markets are up in double digits, while we have underperformed most EM peers. Does it make a case for global diversification?A) The Chinese equity market has rallied over the last year after a long period of underperformance. However, the Chinese equity market has been a laggard over the decades, and the rapid multi-decadal growth in the Chinese economy has not benefited Chinese equity investors to the same extent over the years.That said, we are of the view that long-term investors can benefit from Global diversification to minimise risks and optimise return opportunities.To that effect, we plan to launch dollar-denominated products shortly from our Gift City office, allowing investors to benefit from exposure to US dollar-denominated assets by investing in these products.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
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