MANAGER SPEAK
K Ramanathan, fund manager, Birla Sun Life Mutual Fund
What is your view on interest rates?
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The outlook continues to be positive. Liquidity is comfortable, domestic growth is slackening a little bit, foreign exchange flows continue due to the interest-rate differential in debt and growth-expectations differential in equities, inflation has already started coming down and is expected to sharply come off further by August, global growth outlook is weak and most of the central banks have an easing bias to interest rates.
What is the rationale behind an asset allocation of more than 50 per cent in government securities (G-Secs)?
Corporate spreads have shrunk significantly. Considering these levels of spreads and the positive outlook on interest rates, mid-end G-Secs offer a better relative value.
UTI/oil bonds also offer a better relative value compared to corporate bonds. Hence, we shifted from corporate bonds to G-Secs and UTI bonds.
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