What was your experience during the fund's launch?
The launch was during a period of turmoil, both on the economic and political fronts. Despite adverse circumstances, a strong agent network and good brand name yielded us a healthy corpus. Though we had set a target of around Rs 800 crore by the end of the current financial year, now it appears we will be able to cross the target with ease. Moreover, we also have received a good response from non-metros like Pune by virtue of our agent network. A large chunk of the inflows have come from the retail side to the extent of one lakh plus.
There has been a greater preference towards debt-oriented schemes but this is to be expected considering the prevailing circumstances .
And the fund allocation strategy?
We are in no hurry to buy stocks and follow a piecemeal strategy so as to pick up shortlisted stocks at reasonable valuations. In effect, this does not provide scope for front running in any stocks by virtue of our interest. We plan to follow a bottom-up approach but do not intend to have more than 20 per cent of our assets locked in any specific industry. In this respect you could say that we are adopting a conservative approach. At the individual stock level, exposures would be guided by regulatory stipulations. Though we adopt a relatively conservative approach with respect to our investment allocation process, we would be setting apart at least one fifth of our resources in equity schemes for trading purposes.
Considering the current period of uncertainty in the money and forex markets, what would be your approach for the debt side?
In a scenario of uncertainty and volatility on the interest and exchange rates, we would have our portfolio skewed towards the shorter end of the maturity profile. We will prefer to stay invested in instruments with a three-month maturity profile, initially. Our belief is that the current period of uncertainty on the interest rate scenario makes such a strategy more appropriate.
Measures you would like to see implemented for the mutual fund industry?
Our industry is still at a nascent stage. The share of the mutual fund industry in terms of the market capitalisation on the Bombay Stock Exchange is around 10 to 12 per cent . When we look at the developed capital markets like the US we see that the share of the mutual fund industry in the market capitalisation in the range of 55-60 per cent. Also certain taxation proposals of the last budget have not provided the right climate for growth .What needs to be understood by policy makers is that greater institutionalisation of the capital market, demands a facilitating environment. While there could always be savvy investors who can directly participate in the market, the large chunk would be better served by riding piggy back mutual funds.
What is your strategy to stay ahead of competition?
In an industry which should grow at a healthy pace, there is sufficient room. One of our key strengths would be our investor service standards and a distribution network of 45,000 agents would be an enabler in this respect. The fact that we have managed to attract a large retail audience provides greater stability to our operations. Further, by our association with the Standard Life group we would be in a position to provide more and more innovative products when the insurance sector truly opens up.
