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Experts answer questions about investing in Rbi retail program and Chinese funds

Harshvardhan Roongta of Roongta Securities and Gaurav Gupta of G-Cube Investments appeared on CNBC-TV18 Mutual Fund Corner special and answered some of viewers’ questions.

Responding to a question about whether the RBI’s retail program is a good debt instrument, Roongta said it is a program in which investments in government securities can be brought to the retail investor.

“So a retail investor has to open the Retail Direct Securities (RDG) account with the RBI for free and there the investor can invest in government securities. The securities could be central government securities, state government, investments in treasury bills and even sovereign gold bonds (SG). Previously, the situation was that if you wanted to participate directly in the gilts market, the ticket size or minimum lot size was around Rs 5 crore. However, with this account, a retailer investor can invest as little as Rs 10,000 and can go up to Rs 2 crore. This is an attempt by the RBI to expand the market and allow investors to place money directly in government securities if they wish, ”Roongta said.

“This product is very suitable for those who have just retired. We are therefore looking at retirees who have a body of work in hand and who are looking for a continuous or fixed source of income for the rest of their lives. Here they could invest in long term government securities, in which they will be assured of a fixed return that they enter today and that is the return they will get for the next 20 to 30 years, depending on the bond they buy, ”Roongta explained.

“There was always the option of investing in gilts through mutual funds. Mutual funds had this basket of gilt funds, in which an investor would park money there and get a basket of. our gilt securities, and there wouldn’t be a specific document that However, with this RDG, if there are a lot of people who want to trade government securities and bet on interest rate fluctuations, this becomes possible again by opening that RDG account and trading through it, Roongta said.

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Responding to the question about investing in funds that invest in the Chinese market after the Evergrande crisis, Gupta said that there are currently two funds that invest in the Chinese market, namely Edelweiss and Axis.

“Axis was only launched six or eight months ago. The Evergrande crisis happened in July, and after the net asset value of the Edelweiss China fund fell by around 15% and so far it has only been recovered by 2 or 3% of its current value. So, I would suggest that investors can avoid Chinese funds and only someone with a very high risk appetite looks at them. It would be better to invest in a diversified American fund for diversification, ”he added.

“If you look at the last 10 years of Chinese fund performance, the return is around 15-16% even after the fall, while the five-year return is close to 20%. So for an investor at high risk, if he / she is already exposed to the domestic market and also has an American portfolio and seeks to diversify into another country, he / she could consider a small exposure to the Chinese market, otherwise it is better to avoid ”, a advised Gupta.

For answers to other questions, watch the video.


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