At the time of investing, retail investors tend to opt for equity, mutual funds, precious metals and fixed deposits (FDs). However, lack of awareness has relegated bonds to one of neglected asset classes — particularly among new and young investors.
Some experts feel that technology can, and should, play a significant role in overhauling the scheme of things for bonds. One such person is Vishal Goenka, co-founder of IndiaBonds, who believes that bonds should comprise an important allocation in your portfolio.
In an interview with MintGenie, he talks about the fintech platform that he co-founded a couple of years ago along with his partner Aditi Mittal. He gives a peek into his journey, response of investors, and his future outlook of bonds.
Why did you launch an investment platform focussing on bonds alone?
Investors are generally obsessed with equity. On the other extreme, there is a propensity to invest in the fixed deposits (FDs). So, bonds fall somewhere in the middle.
Moreover, the size of outstanding bond market is 2.3 trillion while the estimated retail participation is less than 2 percent.
How has been your journey with IndiaBonds so far?
It has been encouraging. We have carried out transactions worth ₹1,000 crore in the past two years. There are a few issues regarding convincing investors to invest in bonds. For that, we started run as series of webinars to woo more investors to invest.
Second, we created tools e.g., bond directory which investors did not have until now. Third, we launched a free bond calculator at our platform to help people calculate their earnings by choosing the bond of their choice.
How have you deployed technology to make investment easier for investors?
We have made the platform technology-aligned. There are categories of bonds that you can buy from AAA-public sector bonds to private sector ones. The idea was to make easy for investors. On the top of it, one can carry out three-minute KYC.
The technology ensures that when payment is made, it goes straight to clearing exchange. And this is how we have built a community of 1,00,000 customers in the past two years.
Investors with a low appetite tend to trust the sovereign bonds more. Do you think it is easy to convince the retail investors to invest in other bonds such as corporate, because there could be a risk of default?
It is true that there is a lack of awareness for bonds among conservative investors. This is why we run several financial education workshops to apprise investors of a number of investment options of bonds.
Also, there are a number of reliable categories that offer higher returns than other fixed income instruments. For example, PSU bank bonds give 100-150 basis points higher and state government guaranteed bonds give 1.5 to 2 percent higher than the conventional risk-free returns.
Why did you take a plunge in category of bonds after an MBA from London Business School and a long stint of 12 years in Deutsche Bank?
I worked in the fixed income category at Deutsche Bank. I was the head of credit flow, financing, structured and distressed sales there. Before that, I have worked with Merrill Lynch in London.
So, I have a rich experience of working in the category of fixed income prior to starting IndiaBonds.
About London Business School, the academic rigour that I received there broadened my perspective. I learnt discipline and humility there, and it also gave me a clarity of thought.
Why should someone trust a fintech platform for investing in bonds?
One can look at the pedigree of co-founders. Importantly, ours is a regulated entity and we run webinars in collaboration with the largest stock exchanges.
We also partner with CFOs of large companies for running these webinars.
Sometime ago, Mayor of Indore (Pushyamitra Bhargav) came to out platform to talk about green municipal bonds issued by Indore’s municipal corporation. All this factors, put together, help make this platform appear more credible and trustworthy.
Role of bonds in portfolio.
First Published: 22 Mar 2023, 08:19 AM IST