Edelweiss AMC’s Trideep Bhattacharya says a global technology fund could be an ideal vehicle for investors.

Edelweiss AMC Chief Investment Officer Equities Trideep Bhattacharya says diversification across asset classes, sectors and geographies is essential to reduce potential volatility and downside risk in a portfolio.

In an interview with mint genieBhattacharyya said India has strong regional and global strengths, including the Indian government’s favorable stance on infrastructure development, geopolitical diversification through initiatives like China+1, and a demographic dividend that looks set to favor India over the next 25 years. He said the company has benefited from a combination of trends. .

Do you think this year’s interim budget is in line with market expectations?

Although it was an interim budget in an election year, it skillfully struck a balance, prioritizing common sense over populism. This demonstrates India’s unwavering commitment to infrastructure development as well as maintaining fiscal health.

What are your predictions or expectations for the 2024-2025 financial year?

We expect the 2024-2025 fiscal year to be a year of transition driven primarily by three key expectations:

• Approximately 50% of the top 20 countries will hold national elections in 2024, and macro discussions are expected to shift from economics to politics. This is especially important as the world’s two largest democracies, the United States and India, are holding elections to choose their governments for the next five years.
• We expect the global economy to move from rising inflation in 2023 to a disinflationary phase in 2024-25. As a result, the central bank is likely to discuss the pace of interest rate adjustment later this year.
• Finally, we predict that global growth will reach its lowest point in 2024. In other words, we expect GDP growth to slow in the first half of 2024, before eventually recovering in 2025.

Despite global economic challenges, India appears to be holding its ground. What do you think about India’s resilience in the global economic scenario?

We believe that India’s resilience amidst global turmoil stems from its reliance on domestic revenue drivers rather than heavy reliance on exports. Despite the challenging global macroeconomic situation, India’s strong domestic demand is contributing to sustained profit growth.

Additionally, India is well positioned to stay on top of regional and global trends, including the Indian government’s favorable stance on infrastructure development, geopolitical diversification through initiatives such as China+1, and a demographic dividend that is likely to favor India over the next 25 years. I have benefited from the combination.

Given that this is an election year, what impact do you expect this to have on financial markets and how should investors navigate this election?

The upcoming elections in 2024 are expected to bring volatility to financial markets. Additionally, large-cap stocks have favorable valuations, while small- and mid-cap stocks have strong earnings momentum.

Therefore, investors are advised to allocate their equity investments in a balanced portfolio across market capitalizations, such as multi-cap funds or flexi-cap funds.

Can you talk about specific investment themes or trends that you think will shape the market environment over the next few years?

We believe that aligning the portfolio to areas with resilient earnings is a prudent approach, especially as we anticipate a period of “tumultuous macro environment” characterized by slowing growth rates, especially in the first half of 2024. ing.

Against this backdrop, we expect earnings in sectors such as industrial, power-related, non-banking financial companies (NBFCs), and real estate to remain resilient. Finally, he recognizes the IT services sector as his dark horse for 2024, positioning it as a strategic role for bottoming out in global growth throughout the year.

Given the increasing popularity of digital currencies and blockchain technology, what do you think about their role in the future of finance and investment?

Digital currencies and blockchain technology have the potential to revolutionize finance and investment by providing a decentralized, transparent and efficient means of value transfer and record-keeping. The potential to democratize access to financial services and create new investment opportunities is significant, but regulatory challenges and volatility remain key considerations for widespread adoption.

Are you optimistic about the performance of the technology sector? If so, what are the reasons behind your bullishness?

We are optimistic about the technology sector’s performance over the next three years, driven by both cyclical and structural factors.

We believe this sector is cyclical with the expected global economic recovery in 2025. We are also bullish on structural drivers for the technology sector, including increased digitization across industries, accelerated adoption of cloud computing and artificial intelligence, and continued innovation in cybersecurity and biotechnology.

In this context, global technology funds can be an ideal vehicle for investors seeking a thematic fund that plays into the aforementioned trends.

What measures would you recommend investors take to reduce potential volatility and downside risk in their portfolios?

Diversification across asset classes, sectors, and geographies is essential to reduce potential volatility and downside risk in a portfolio. Additionally, regular portfolio rebalancing, risk assessment, and maintaining a long-term investment horizon can help manage volatility.

When considering investment options, what criteria should beginner investors focus on when choosing between large-cap, mid-cap, and hybrid funds? And how can they make these choices effectively? Would you like to offer some advice?

New investors should focus on risk tolerance, investment objectives, and time horizon when choosing between large-cap, mid-cap, and hybrid funds. Large-cap funds offer stability but can have slower growth, making them suitable for conservative investors. Mid-cap funds offer higher growth potential but are more volatile and are suitable for moderate risk takers. Hybrid funds combine stocks and bonds to balance risk and return.

Consulting a financial advisor, conducting thorough research, and starting with a diversified fund can help new investors effectively navigate these choices and ensure alignment with financial goals .