DSPML Balanced Fund has outperformed the average balanced fund since October 2002. What do you attribute the success to?
We attribute our performance to good stock selection and active sector rotation. The fund benefited by being well represented in oil and refining, banking, pharmaceutical and technology sectors.
Cement, auto and engineering stocks, too, enhanced our performance.
Your average cash allocation this year has been high - around 20 per cent. Isn't this overly conservative?
Cash allocation is a part of the fixed-income component of the fund. It varies depending on our view of the likely trend in interest rates in the near and medium term.
It would also depend upon the level of liquidity required to support and increase the equity weightage of the fund.
You seem to be bullish on IT and healthcare sectors. What is your prognosis for the sectors going forward?
The IT sector appears to be on an uptrend now with increased volume growth and prospects of a recovery in IT spending abroad.
Additionally, the sector appears to be underowned. The pharmaceutical sector is more of a core holding theme.
With Indian companies expanding their footprint in overseas markets and beginning to play a significant role in the generics market, FIIs are beginning to take note of the growth prospects in the sector.
What is your outlook on the debt markets?
We think interest rates will remain stable to soft for the next three-four months and likely to bottom out thereafter.
