"G-Secs reduce our portfolios credit risk"

MANAGER SPEAK

You hold about 25 per cent of your assets in one GoI paper. Isn't that risky?

It is the maturity/duration of the portfolio which should be considered risky not the percentage allocation to government securities (G-Secs).

We do have a higher percentage allocation to G-Secs since it is easier to enter and exit G-Secs and take advantage of trading opportunities. Besides, G-Secs substantially reduce the credit risk of our portfolio.

What is your view on interest rates? What will be your strategy going forward?

The interest rate environment currently looks benign over the medium term. I do not see any major negatives like interest rates rising substantially.

We will increase or decrease the maturity of the portfolio through allocation to G-Secs. We will look for value buying in corporate bonds if spreads widen from current levels.

Your allocation to equities is relatively low copared to peers. Why?

For the past four-five months the fund's equity exposure has never been below 10 per cent of the scheme's NAV. As of September, the equity exposure is at 12 per cent. The maximum permissible is 15 per cent as per our offer document and we are satisfied with current levels.

In fact, it is our higher exposure and the specific equity picks which have boosted the performance of the scheme. These are responsible for higher than category average returns.