“I have three simple rules in my investing. I don’t try to predict anything, as it makes me a poor decision maker. Secondly, I have seen that if you buy an asset class at higher bands of its valuation, generally future returns are lower and vice versa. And the third thing that is if you buy good quality asset class or good quality businesses, your chances of survival are higher”, explains Kalpen Parekh, MD and CEO, DSP MF, in this episode of the State of the Economy podcast, businessline’s Parvatha Vardhini C.

 Vardhini starts the conversation by referencing one of Parekh’ s recent tweets, where he suggested a shift towards hybrid funds in his portfolio, moving away from the previously favoured flexi-cap funds. This tweet sparks an in-depth conversation about Parekh’s concerns regarding the current state of the market. He says that the valuation boundaries for Indian markets have been at around 12 times in a bear market to 25 - 27 times in a bull market peak, with the mathematical average at somewhere around 17 -18 times. He highlights the importance of asset allocation ie balancing equity investments with fixed income and other asset classes such as gold, especially when market conditions become frothy or expensive. He also discusses the role of contrarian investing and how DSP Mutual Fund has historically launched products that cater to sectors and segments that may be undervalued or overlooked by the broader market. This approach helps ride on mean reversion, which is a reality in markets, according to him. He admits that the performance of DSP MF’s midcap fund has not been up to the mark and elaborates on the mistakes and the corrective action taken on this front.

Throughout the episode, Parekh gives nuggets of wisdom on investing, underscoring his belief in the power of compounding and the value of holding quality assets over extended periods.

Listen to the podcast to know more. 

(Host: Parvatha Vardhini C, Producers: Amitha Rajkumar, Anjana P V)

About the State of the Economy podcast 

India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders. To help you make sense of the bundle of contradictions that the country is, businessline brings you podcasts with experts ranging from finance and marketing to technology and start-ups