'Yields are likely to remain range bound'

FUND MONITOR: Navneet Munhot, Fund manager, Birla MIP Mutual Fund

As far as the equity portion is concerned, we have a well-diversified portfolio spread across large- and mid-cap stocks, based on a bottom-up approach taking into consideration not only the valuations but also the qualitative aspects like management track record, consistent growth rate and business model.

We avoid too much concentration on a particular sector or a stock. In the fixed income portfolio, we maintain a low maturity portfolio of around 1-1.5 years in order to reduce volatility. The focus is to increase the current yield of the portfolio.

What debt-equity proportion do you generally maintain?

The debt to equity proportion is mostly 85:15. We have never crossed the equity allocation beyond 15 per cent of the total corpus, though it has gone below that level sometimes.

What is your view on the debt market?

Looking at the global scenario, which is likely to be positive for bonds and liquidity conditions, yields are likely to remain range-bound in the near future.

However, with higher credit demand and pressure of inflation, interest rates are likely to inch up a little in the medium- to long-term.

Liquidity conditions are expected to improve due to government spending, continuous FII inflows, rupee appreciation and the unwinding of market stabilisation scheme. What will your strategy be going forward?

We will remain conservative in both our equity and debt portfolios. We will continue to maintain the maturity level of 1-2 years.

At present, we have a mix of corporate and securitised papers and the proportion of AAA rated securities is the highest. But we might shift to below-AAA securities also if we feel there is an opportunity to cash on..

In the equity portfolio, we will continue to maintain a bottom-up approach and keep a mix of large and mid cap stocks.