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Investing In Mutual Funds- Volatility & The New Digital Experience

investing in mutual funds

Months into the pandemic, we have adjusted to social distancing and self-quarantine norms. The past few months were harsh and difficult and we have come a long way but the future still looks murky.

With unemployment rates at a high, people are already under the fear of pay cuts and layoffs. Personal finances have taken a massive toll on people.

While news of increasing recovery rates can be considered as a silver lining, there is no doubt that the economy is struggling to stay afloat.

Market volatility is something that an investor deals with on a regular basis. But, the ongoing situation has made them scratch their heads over the future of investments.

Mutual Funds In Times Of Market Risk — Still ‘Sahi hai’?

Mutual Fund companies have been active with their outreach programs for quite some time now. In 2017, the Association of Mutual Funds in India (AMFI), launched a campaign under the tagline ‘Mutual funds Sahi Hai’ to educate people about mutual funds. This was a part of the investor awareness outreach program. The aim of the campaign launched was to bust myths and encourage investors to opt for mutual funds as their potential investment options.

While the campaign did help gain the trust of people and brought around 50 lakh investors in a single year, Mutual funds are still considered risky and hard to understand by a huge number of people. And uncertain times like this further add to the fuel.

The nationwide imposed lockdown, the uncertain future of an economy already in turmoil, and the volatility of the markets have contributed to growing concerns of investors. Should they invest more, sell-off, or wait till it gets normal?

Market Volatility: A Minor Setback In The Long Term Picture

Reports indicate that Mutual Funds investors must not panic as the ongoing situation will not last forever and things will ease out eventually.

Indian Institute of Technology-Hyderabad did a study on Mutual Funds which said “Nonetheless, there is no need for Mutual Fund investors to panic as long as the net asset value (NAV) of their investment drastically does not die out in this ongoing first quarter of FY 2020–21,”

While the economic slowdown may plant seeds of doubts in investors’ brains, it is important to keep one’s cool and look at the long term prospectives. The markets will eventually start giving better returns.

Reports by Arthikdisha show that the mutual fund industry has proven to be effective in wealth creation. With an average return of 12 to 15 per cent in the past 10 to 15 years, investors can rely on long-term returns.

Experts tell investors to focus more on their financial plans than the changing demographics of the market. This would help them make wiser decisions about their investments.

Wealth Creation In Crucial Times Through Investors’ Glasses

According to AFMI, the contribution of SIP rose to Rs 100,084 crore in the fiscal year 2019–20 as reported by Bloomberg Quint. In a highly unpredictable market, investors look for a safer route for wealth creation. The rupee-cost averaging through a SIP in uncertain markets reaps better long-term benefits. As the purchase is made consistently for a greater period. Thus, on average providing lesser risks and better returns to the investors. Investors aim to diversify and balance the risks and uncertainties of the market. Hybrid funds, STP or Systematic Transfer Plans, Large-cap funds help them do that.

For a long time, completing formalities involved the investors to fill out lengthy forms. The Know Your Customer (KYC) process required investors to visit the bank, produce the necessary documents and wait in queues. While many organizations did try to ease out the process, in-person verification was a must. The onset of the pandemic posed its own set of challenges to both the institutions and the investors.

How Adaptive Have Financial Institutions Become?

The outbreak of the virus continues to trouble citizens across the globe. Many institutions have adopted precautionary norms to function in a safe manner. Many fund houses have allowed employees to work from home in containment areas. Those working in offices are taking mandatory measures. Regular temperature checks of employees and visitors are one such measure. Institutions use infrared thermometers for this. Regular hand washing, availability of sanitizers is a must. These measures ensure responsible communication in times of crisis.

Ensuring An Efficient Digital Experience

In the wake of the crisis and a nationwide imposed lockdown, several mutual fund houses moved the KYC (Know Your Client) procedure online. While some representatives still went to the client’s house to get the in-person verification (IPV) done, others allowed the clients to get the IPV done through a video recording.

However, each fund house may have different procedures making the situation unfavorable and confusing for the people. To standardize the process, the Securities and Exchange Board of India (SEBI) released a clarification on the KYC norms.

  • The intermediaries carry out the online KYC procedure through their apps. Along with the bank and PAN details, personal details can be recorded. This includes the customer’s photograph, name, address, the mobile number.
  • Video IPV can be done through the apps while the clients can upload a signed cancelled cheque online.
  • As far as verifications are concerned email and mobile numbers can be verified by OTP generation. Aadhar and PAN can be verified through UIDAI and income tax department respectively. Digilocker can also be used to verify documents. The investor can then digitally sign the KYC form and submit it.

How Signzy is helping build the future?

Through our tech-enabled solutions, Signzy intends to offer financial institutions futuristic operational assistance. Our Algorithm Risk Intelligence aims to provide a satisfactory background check. Digital real-time KYC, Digital signature for KYC, Biometric signatures, Digital contracts are some of the key features of our products. Through our AI solutions, our system is equipped to meet strict data security requirements to help financial institutions function smoothly.

About Signzy

Signzy is an AI-powered RPA platform for financial services. No matter how complex your workflow or operational complexity, Signzy is able to completely automate your back-operations decision-making process into a real-time API. This is possible due to a combination of Nebula — Our no-code AI model builder and our Fintech API Marketplace of over 200+ APIs. Today we work with over 90+ FIs globally including the 4 largest banks in India and a Top 3 acquiring Bank in US. Globally we have a strong partnership with MasterCard and offices in New York and Dubai to serve our customers in the 2 geographies. Our Product team of 120+ people is building a global AI product out of Bangalore.

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