Fixed Income space fell more than 70%, but strong inflows were seen in liquid funds. What is the trend that you are seeing in the fixed income space given the fact that equity markets are trading near record highs? Do you see some churn?
No. Liquid segment is largely an Institutional play and do not see any reallocation by retail investors into this category.
In terms of NFOs there were many index funds, as well as thematic funds, were launched. What is fueling the trend?
Large institutional flows into large cap implies that it is harder to deliver alpha by active fund managers – but they are a critical part of an investor’s asset allocation decision.
Hence, index funds can be a low-cost option to synthetically create a dynamic multi cap portfolio for an active investor.The same is now happening in broader cap curve funds as well as broader benchmarks such as Nifty 500 are 70 to 75% large cap dominated.Hence, flexicap managed actively tend to have 60 to 65% large cap exposure.Thematic funds offer an opportunity to play emerging trends in a more concentrated manner.
You recently launched a Business Cycle fund — why now? Which themes will you be focussing on?
The Business Cycle fund is a Dynamic Thematic fund which will run a concentrated portfolio of 35 to 45 stocks.
The themes we chose will be based on long term macro trends which actually create the business cycles running in the economy and hence have the power to outperform border markets.
Themes typically cut across sectors- so if we pick 3 to 4 micro sectors or industries under each theme – diversification will automatically ensue even with a concentrated portfolio.
Given this underlying thought process the portfolio will be ‘growth oriented and multicap’ and hence current valuations are not a concern for us in structuring the portfolio.
Of course, we will take advantage of the maximum period permissible under the offer document and regulations to deploy the corpus in the present scenario.
The current macro themes we will focus on are
1) Manufacturing,
2) Urbanisation/Premiumisation/Formalisation,
3) Sustainability and
4) Technology and Digital transformation.
Retail investors are now becoming more aware of when to put the money and this is evident from the fact that most investors wanted to buy the dip post election results. What are your views when you interact with the clients?
Belief in the India growth story remains intact and hence ‘buy low sell high’ is entering their thought process especially in those who have been investing for 10 years plus.
What would you advise investors for the month of June?
Continue taking a staggered approach to allocation as the upcoming Union Budget (latest by July 5th) is very important from the fact that it’s the first coalition dharma budget in over a decade!!
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