What do you get when you mix a computer science graduate, a sampling co-ordinator for a fashion designing firm and an MBA finance? The answer is Amandeep Singh Chopra, a top performing fund manager who has got more stars than you could count. Among Value Research's 11 categories of five star rated debt funds, UTI Mutual Fund finds mention among six of them. But how does the senior vice president and fund manager at UTI Mutual Fund reconcile computer science with its focus on logic, fashion design where creativity takes centrestage and a career in managing fixed-income securities where your response to market movements could sink or save your fund? "I was clear that I had to do an MBA right from the outset. And a stint in a garment export house after my graduation from St Stephen's College, Delhi was to explore my creative side," he says. A summer placement with Citibank and Chopra was hooked on to the world of finance and after his management studies joined UTI as a research analyst. The initial years In 1994-95, the most active players in market research were HG Asia, Peregrine India and Smith Newcourt""all foreign broking and research outfits. "Back then, research was not a focussed effort and discounted cash flow and valuation models of Damodaran and Tom Copeland were unheard of," he says. Starting off in research thus had its advantages in 1994. "It was a perfect learning ground and acted as a springboard for analysts,"says Chopra. UTI's clout both in terms of equity participation in more than a thousand companies and loans helped researchers gain access to company managements, manufacturing facilities, understand business strategies, industry dynamics and the bear and bull phases. After six years at research fine-tuning the systems he helped develop, Chopra moved on to institutional development. The restructuring of erstwhile UTI gave the management an opportunity to make key changes. "We rationalised our product portfolio, introduced a decision support system which was a first for the industry and helped generate what if scenarios that made investment decisions a lot easier for the fund manager," he says. Instead of a diffused structure, UTI Mutual Fund had three main areas""dealing, research and fund management. After putting the systems in place, Chopra kicked off his innings as a fund manager with a hybrid fund. The 'bull run' in debt was just the right time to be in the market. The good times however did not last long. The end of 2003 saw the rates inching up again. Debt performers The bearish phase had an important lesson for Chopra and there were no free lunches any more. "I had to judge my calls more closely," he says. To manage the portfolio of schemes better, Chopra decided to stick to the objectives of various schemes in terms of liquidity, yields and tenures so that they could be positioned to investors accordingly. This focus has helped Chopra ensure that most of his funds were in the top quartile of their respective category. "The Liquid Cash Plan has been rated at the highest level by Fitch and ICRA," says Chopra. Other star performers were the Floating Rate Fund which gave an annualised return of 6.21 per cent as against a category average of 5.54 per cent and the MIS Advantage Plan which gave a return of 10.7 per cent against a category average of 7.66 per cent as on September 13, 2006. "The sideways movement of interest rates give us a trading opportunity and we were able to enter at the peak to get the benefit of the fall. If you get two out of four calls right in this band then it is a job well done," says Chopra. Increased exposure to short-term instruments before March 2006 which saw liquidity tightening presented attractive levels to buy six months to one year paper. Subsequent easing of liquidity a quarter later helped net the gains for Chopra.
The retail investor On the lack of retail participation vis-a-vis institutional investors, Chopra says that investors at the retail level have not understood debt and benchmark it against FDs whereas fixed income instruments have a cycle. "Investors entered the market when the downward interest rate movement was reversing and were disappointed subsequently," he says. He believes that investors must have a portfolio approach which should include a debt component. Making his case for debt he says that they give higher returns than FDs, have tax advantages, help investors diversify their risk and are an attractive option now that most assured returns schemes are offering market-related returns. Allocation for a typical investor would be based on their risk appetite. "About 30 per cent of their funds should be invested in Monthly Income Plans which have an equity portion, a similar portion could be allocated to short term plans (STPs) where returns are marked to market and help capture interest rate movement and the balance in FMPs and liquid funds," he says. Since STPs have a two-year cap, investors with a higher risk appetite could look at medium and long-term plans. On the equities front, Chopra's strategy is a combination of the bottom up and top down approaches, with fundamental analysis at the core, no active churning and a well-diversified portfolio instead of a concentrated one. A place in the hills When he is not in the dealing room, Chopra likes to explore new place. "I trek and travel whenever I get the opportunity," he says. To soothe his nerves he listens to western country music and likes numbers of Randy Travis and Willie Nelson. When he is done with the markets ten years hence, Chopra would like to settle down with his wife and four year old son, Vanshdeep, in a cottage at Mukteshwar in the Garhwal Himalayas. | |||||||||||||||||||||||||||||||||||||||||||||
Peak performer
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First Published: Sep 18 2006 | 12:00 AM IST
