Axis MF's B. Gopkumar Advocates Long-Term Investing, Champions Simple Finance & Inclusive Growth Across India
In an insightful discussion on Vivek Law's "Simple Hai!" podcast series, B. Gopkumar, Managing Director and CEO of Axis Mutual Fund, delved into his extensive experience in the Indian stock market and shared his vision for wealth creation. Gopkumar, who has observed the stock market for over three decades and previously held leadership roles at AIS Securities and Kotak Securities, offered a veteran's perspective on investing and the evolving financial landscape in India.
A Veteran's Perspective on Investment Philosophy
Gopkumar began his advisory career in 2003-2004, a time when the concept of the middle class with disposable income was not yet prominent, and Systematic Investment Plans (SIPs) were rarely discussed. He recounted his journey, having stood by all large traders in the country during his time at Kotak Securities. However, his personal philosophy was firmly against Futures and Options (F&O) trading. He notably stated, "Futures have no future, and options offer no options," believing that if customers consistently lose money, a long-term business cannot be sustained. He emphasised building a business based on the cash market, where accidents are much lower as long as one holds for a long period and invests in well-researched, high-quality stocks. This long-term, quality-focused approach has been a cornerstone of his career, enabling him to navigate five or six deep market cycles.
Axis MF's Ambitious Vision and Product Strategy
As the head of Axis Mutual Fund, Gopkumar outlined the company's clear aspirations. Their primary growth objective is to become a top-five Asset Management Company (AMC) in India by FY28. He highlighted Axis Mutual Fund's achievement as the youngest AMC to rank among the top eight, underscoring their growth potential. The fund's investment philosophy is rooted in "growth and quality".
He spoke about Axis Mutual Fund’s adoption of a cautious and long-term approach to product development. They avoid narrow or large thematic funds, preferring broad-based themes relevant for at least 10 years, such as manufacturing and consumption, which they believe are "game changers" for India. They are particular about risk-adjusted returns, aiming for steady performance rather than merely being the top-performing fund. For instance, their Small Cap fund maintains a beta of 0.7, indicating lower volatility, despite managing ₹26,000 crore in assets and being the fourth-largest fund in its category.
The discussion also touched upon Specialised Investment Funds (SIFs), which, while offering 2-3 percent higher returns, come with higher risk and are regulated by SEBI for investments above ₹10 lakh. Axis Mutual Fund has obtained the necessary licenses and appointed a CIO and a separate dealer to build this "huge category," seeing it as a significant opportunity that was previously available only to High Net Worth Individuals (HNIs).
Democratising Investment
Law noted the astonishing lack of financial advisors in India – fewer than one lakh for a population of 140 crore – a challenge Gopkumar acknowledged his commitment to address. Gopkumar pointed out positive changes, such as the inclusion of financial education in school curricula and the rise of digital platforms that have significantly eased the process of opening mutual fund accounts, making them more accessible than ever before.
For young, first-time investors, Gopkumar advised starting early, even with small amounts like Rs 500 or Rs 10 (per day SIPs). He drew a clear distinction between a "saver" (investing in FDs) and an "investor" (investing in the stock market), highlighting their different inherent risks. He suggested that first-time investors should begin with pure diversified equity funds, such as multi-cap or flexi-cap funds, as a good starting point. While acknowledging that direct stock picking is viable for those with interest and time, a diversified mutual fund is often the easiest entry point.
Challenges and Evolving Investment Behaviour
Gopkumar shared his observation that India has a disproportionate number of borrowers compared to investors, stating that "95 percent are borrowers, only 5 percent are investors". He lamented that despite the visible 12 crore demat accounts, the "real meat" of investors might be as low as 4 crore. He noted a "disconnect" in the newer generation, referring to some speculative behaviour as "mall money," where individuals invest small amounts and quickly redeem profits for discretionary spending.
He also pointed out that real wealth creation in India often starts for individuals above 40 years of age, leading them to miss out on the power of compounding early in their early careers. This phenomenon, he explained, is partly due to societal pressures to acquire assets like a house early in life, leading to substantial portions of savings being tied up in home loans. Despite this, he expressed optimism, observing that panic during market corrections is decreasing, and people are increasingly putting money in during dips, indicating a maturing market.
Simplifying Finance for the Masses
Both Gopkumar and Law agreed that financial knowledge has often been overly complicated by journalists and the industry itself, fostering a fear among common people. Gopkumar firmly believes in delivering a "simple product" and making communication as straightforward as possible. He stressed that financial services are fundamentally a "people business," dependent on bringing the right people together with a strong execution, built on ethics and well-built products.
He added that Axis Mutual Fund is deeply committed to investor education, adopting districts to run financial literacy programmes, aligning with their broader goal of being a "knowledge partner". Gopkumar concluded by emphasising the immense "hunger" for learning in smaller towns and the need to encourage young people to participate in the market, especially with the advent of digital infrastructure. His journey, from a small town in Mangalore to the helm of a major AMC, stands as an inspiration, highlighting how understanding money and capital markets can lead to economic growth and financial security.
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