Exposure to treasury bills helps us manage volatility

MANAGER SPEAK

Murthy Nagarajan, Fund Manager, Tata MIP  

Your equity holdings are at less than 8 per cent despite a bull run in the markets. How do you explain this?

We are positioning ourselves as an income fund. We have a mandate of not investing more than 10 per cent of our portfolio in the equity markets.

This acts as a control measure for us and enables us to contain the risk.

What is the average maturity of the fund? How much change has it undergone over the past three months?

The average maturity of our fund has varied in the range of 3.5 to five years. We are looking to keep it at five years in the next few months.

Do you see value in moving towards lower-rated papers?

As per our recent portfolio, the maximum amount is devoted to government securities. The allocation to gilts stands at around 50 per cent.

If you look at our track record you would find that we have never missed a dividend. This is because of the prudent policies we follow. We ensure that we never deliver negative returns.

That is why we increase our exposure to treasury bills as they help us hedge against the volatility in the equity markets. The same goes with allocation to the AAA-rated papers. We do not believe in taking risk in debt and the capital markets at the same time.

As and when we reduce our allocation to the equity markets, we shall increase our allocation to the lower-rated papers.

What is your market outlook?

We believe that the equity markets should be range bound over the next one or two months. The debt market should continue to give good returns till the time the Credit Policy is declared.

After that the changes that are declared in the Credit Policy shall determine the direction of the debt market.