MF Masters | Navin Agarwal of Motilal Oswal AMC on asset allocation

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The global pandemic is changing the world rapidly. The Covid-19 infection has taken a hard hit on the global economy. As clouds of uncertainty linger, the investor sentiment seems to tilt towards deeper skepticism.

So, how should an investor ideally shape his strategy in this scenario?

In an interview with Money9, Navin Agarwal, MD & CEO of Motilal Oswal AMC, shared his insights on what an investor should do.

Avoid too much activity

“Retail investors responded to the initial wave of Covid-19 in March’20 by selling mutual funds. This resulted in MF overflows by the domestic investors for about 9-months. A lot of money exited the market last year. Responding to a pandemic in this manner robbed you off the recovery in the markets. When you respond to such a well known catastrophe, there are less chances of making any money,” he told Money9.

He believes that too much activity during the current times may actually rob you off the gains. This is due to the constant market volatility and rotation across sectors.

Portfolio allocation

While the pandemic will hopefully subside soon and it’ll be a good time to invest again, how sure are you about the portfolio allocation?

“The amount of money you need for consumption or an investment – all of which cannot be postponed in the future – should be set aside. Put the remaining money in equities because it eventually trumps all other asset classes. Equities is the only way to beat inflation and to augment your real purchasing power. Everything else depletes it over time,” Agarwal suggested.

The bottom line here is – never consume out of your savings to invest in equities. Put in the extra money.

Is DIY the right approach?

Investment is a complicated process considering how high the stakes are. It is not a mere test of IQ, but of the temperament.

But many people are now willing to invest directly in the stock market bypassing brokerage houses and other fund advisors.

This ‘do-it-yourself’ approach to investing doesn’t sound too pleasing to Agarwal, who feels investment planning is a rare job and should be duly left in the hands of the professionals who have a better sight and experience to guide people.