'Interest rates will remain range-bound'

MANAGER SPEAK/ Shobhit Mehrotra, Senior Fund Manager & Head of Credit, HDFC Mutual Fund

Shobhit Mehrotra

The fund has maintained a low expense ratio. Going ahead, would you be able to maintain the same ratio?

We would strive to maintain the expense ratio at current levels. However, any changes in the cost or tax structures going forward may force us to take a relook at expenses.

Your allocations are mainly in higher-rated papers. Are you planning to continue the low-risk strategy in portfolio allocation?

Our portfolio allocation strategy aims to construct a well-balanced and well-diversified portfolio across asset classes, sectors and benchmarks. We would continue to focus on higher-rated credits unless we find significant value in lower-rated papers.

Do you think availability of floating-rate papers will be a problem going forward?

The market for floating-rate papers has shown good improvement in the last one year. Therefore, availability of floating-rate papers may not be an issue. However, there is enough room for improvement in the manner in which pricing and valuation of floating-rate securities are done.

What is your take on the interest rate scenario for the year?

Given our outlook on inflation, oil prices and liquidity, we feel interest rates would be range bound with an upward bias. The credit policy statement from RBI in the third week of October should provide direction to where rates are headed in the near future.

Your average portfolio maturity has ranged between 0.52 and 0.81 years. What are you targeting in the coming months?

We try to keep average portfolio maturity between 0.5 and 1.0 years to balance the scheme's risk-return profile.