'We follow an active profit-booking plan'

FUND MONITOR: Sameer Kulkarni, head (Fixed Income)

We aim to maximise risk-adjusted returns for investors and create wealth for them over the long term. We maintain a higher credit quality portfolio and keep the maturity profile at intermediate levels. On the equity side, the portfolio is managed conservatively.

For instance, the exposure to a particular stock rarely exceeds 2 per cent, while the exposure to a single sector is normally maintained below 5 per cent. Moreover, we follow an active profit-booking strategy to reduce the downside risk on the equity component.

The fund has an higher exposure to equities compared to the industry average. Is this strategy likely to continue, considering the volatility in equity markets?

We have maintained the equity exposure between 15 and 20 per cent over the last six months. The allocation to equities will be based on our medium- to long-term outlook for equities, which is positive and does not depend on short-term market movements.

In view of the hardening interest rates, what will be your strategy going forward?

We will focus on the shorter end of the yield curve, given the volatility in the debt markets due to supply and inflationary concerns. We believe that the longer end of the curve might witness more volatility, due to these factors and others like the pace of credit pick up, global oil prices and the rise in US interest rates.

Given the steepness of the curve in the two and three year segment, we expect the volatility to be on the lower side on a relative basis. We might consider increasing the duration of the portfolio based on the outcome of events and our views on the direction of interest rates, going ahead.