Transcript of Chat with Mr. Dheeraj Singh,Fund Manager - Debt, IL & FS Mutual Fund - Debt funds-What lies in FY03 ? - (16/04/2002)
[04:29:30 PM] => Myiris: Welcome to the live chat session Mr Singh.
[04:30:19 PM] => Myiris: Our guest today is Mr Dheeraj Singh.
[04:32:00 PM] => Myiris: Mr.Dheeraj Singh is the Fund Manager,Debt, IL&FS Mutual Fund.At the time of this conversation / chat, Mr.Singh may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr.Singh is based upon information that he considers reliable, but does not represent that it is accurate or complete, and it should not be relied upon as such. Mr.Singh, his company and its affiliates, officers, directors, partners, and employees may, from time to time, have long or short positions in, buy or sell and deal as principal in the securities, or derivatives thereof, of companies mentioned herein and may take positions inconsistent with the views expressed.
[04:34:21 PM] => None of the information contained herein constitutes, or is intended to constitute a recommendation of any particular security or trading strategy or a determination that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. You should consult with and rely upon your own advisors whether and how to use such information in making any investment decision.
[04:35:46 PM] => Lastly the views expressed by Mr.Singh have no bearing whatsoever with that of IRIS Ltd. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website www.myiris.com
[04:37:24 PM] => Myiris: Welcome to the live chat session.
[04:38:27 PM] => Shree: With the chances of interest rates falling looking dim, is debt a good option to invest in?
[04:41:32 PM] => DS: You are probably right in your assessment that interest rates may not fall significantly in the short term. However, this does not mean that debt is not a good option to invest in. Debt funds (assuming you mean debt funds when you mention debt) would still give you steady returns, which will in most cases be higher than the returns provided by alternative investment avenues in the same risk class. Thus, it would not be right for investors to keep looking for bonanza returns from debt funds (as has happened in the past). One should temper return expectations and evaluate debt fund investments accordingly.
[04:44:14 PM] => I sincerely believe that investors should follow an asset allocation strategy and allocate at least some portion of their investments to debt.
[04:45:40 PM] => kiran kumar: If RBI increases interest rates, will debt investment get a boost? If not what will benefit?
[04:47:27 PM] => DS: Most interest rates in the economy are market determined and RBI's actions only influence these rates. Needless to say that RBI's reduction or increase in benchmark rates does have a sentimental impact on the market.
[04:49:49 PM] => For the moment RBI increasing interest rates is not foreseen.
[04:51:30 PM] => sameer55: Which funds are likely to perform better in this financial year keeping in mind the interest rate scenario?
[04:54:07 PM] => DS: Debt funds would still provide steady and stable returns. Given the interest rate scenario, it is difficult to expect debt funds to provide high returns that have been the norm for the past 2-3 years. However, if one keeps in mind that debt funds are expected to provide returns linked to the debt market, it is imperative that the investors expectations are tempered accordingly.
[04:56:05 PM] => Returns from equity funds are obviously linked to the performance of the stock market.
[04:57:03 PM] => Dhruv Chopra: Is it still attractive to go for gilt or bond? If yes what is the time horizon?
[04:58:03 PM] => DS: If one is contemplating investment in long term plans of gilt funds or bond funds, it is ideal to have an investment horizon of 6 months or more.
[04:59:36 PM] => Raj phallisinagara: Which category of mutual funds will give the best returns this year and why do you feel so?
[05:01:20 PM] => DS: Equity funds might give good returns provide the stock market performs well (as many analysts expect it to).
[05:02:54 PM] => Debt funds are expected to provide returns of say 8-10%. Bonanza returns that debt funds have provided in the past one year or so may be a thing of the past.
[05:03:41 PM] => Neelasri desai: What are the new schemes that IL&FS plan to launch this year?
[05:04:33 PM] => DS: We have launched a slew of products in the last quarter. These include Gilt Fund, Short Term Plan in the Bond Fund, Index Fund, Fixed Maturity Plan.
[05:06:11 PM] => In the future we will be launching fixed maturity plans at regular intervals. We are also in the process of finalising a few more products but are currently awaiting the finalisation of the tax laws which would be clear after the Finance Bill is passed by Parliament.
[05:07:08 PM] => Suhasini Madhukar: Can you elaborate on the suitability of various debt products for investors having different investment time horizons?
[05:09:39 PM] => DS: Personally, I am most comfortable with the following investment horizons for various debt products
[05:10:10 PM] => Very Short Term (1 day to 15-30 days) - Liquid Funds
[05:10:41 PM] => Short Term (15-30 days to 3-5 months or so) - Short Term Plans
[05:11:31 PM] => Medium Term (3-5 months or more) - Bond Funds or Gilt
[05:14:20 PM] => Vikas sharma: What factors should investor take into account while investing in debt funds?
[05:15:04 PM] => DS: Various factors that investors should consider while investing in debt funds would be-
[05:15:19 PM] => 1. Their own risk appetite
[05:15:31 PM] => 2. Their investment horizon
[05:16:11 PM] => While evaluating funds one should look for funds with the following attributes-
[05:16:31 PM] => 1. Funds with high percentage of liquid (easily saleable) securities
[05:17:02 PM] => 2. Risk profile similar to investors' expectations. A portfolio with high portfolio duration would denote higher interest rate risk and vice versa.
[05:20:45 PM] => Ullhas_Nair: Various private sector foreign players have announced plans to enter the Pension Fund business once it is opened. What is your view on this?
[05:22:16 PM] => DS: Actual outsourcing of the management of pension funds still has some way to go in this country. There are various people working towards this but the current regulations which govern management of pension (provident) funds hamper efficient management.
[05:23:15 PM] => What has been happening however is that various services linked to pensions (accounting, maintenance of records etc) are being outsourced and are being seen as a good business opportunity by several players.
[05:24:09 PM] => cyberdreams: Can I buy ETC networks ?
[05:24:59 PM] => DS: I'm not an equity expert and therefore prefer to avoid any comments on this.
[05:26:29 PM] => Mcdonald007: Do you see corporate debt issuance picking up in the near term ?
[05:28:22 PM] => DS: Corporate debt issuance is expected to pick up on the back of pick up in the economy and subsequent pick up in investment demand. Till such time, we might just be witness to mostly refinancing deals.
[05:32:36 PM] => crazyfish: what is the appropriate debt investment vehicle for short term investment ?
[05:36:21 PM] => DS: For very short term (one day to about 15 odd days) I would recommend liquid funds. For an investment of 15 days to about 3-6 months, I would recommend short term plans.
[05:37:12 PM] => ramraj: There has been talk of linking the NDS with the stock market, do you see this happening in the near future?
[05:39:41 PM] => DS: This is news to me. NDS deals with taking the Government Securities market online and is not in any way connected to the stock market.
[05:41:22 PM] => Brenda: What is the Average maturity of your debt funds?
[05:42:00 PM] => DS: We are currently maintaining the following maturities/modified duration-
[05:43:02 PM] => IL&FS Bond Fund : Maturity (approximately 5 years); Modified duration : Approx 3.6
[05:43:29 PM] => Bond Fund - Short Term Plan : Approx. 180 days maturity
[05:43:54 PM] => Liquid Fund : Approx 30 days maturity
[05:44:13 PM] => Gilt Fund Short Term Plan : Approx 2 yrs maturity
[05:44:32 PM] => Gilt Fund Long Term Plan : Approx. 10 yrs maturity
[05:44:54 PM] => Rajesh_12: Do you actively churn your portfolios?
[05:45:35 PM] => DS: We are an active participant in the bond market and keep buying and selling bonds based on interest rate and portfolio views.
[05:46:06 PM] => Anand Madhavan: Is there a high correlation in the trading activity between g-secs and corporate papers?
[05:46:48 PM] => DS: I have not been able to understand your question properly! If it pertains to correlation between level of activity in the corporate bond market with that of gilts my answer would probably be Yes.
[05:47:15 PM] => sanjay merchant: What kind of returns can investors expect from income funds over the next 6 months to 1 year?
[05:48:00 PM] => DS: Debt Funds should be able to give returns of about 8-10 % in the next six months to a year.
[05:48:32 PM] => Bhatiabrothers: What are the advantages of debt mutual funds over traditional bank deposits?
[05:49:53 PM] => DS: Anytime liquidity and the opportunity to enhance gains due to interest rate movements. Also, the ability to restructure portfolio based on a change in view on the bond market (or interest rates) is also an added benefit. This may not be relevant for lay investors but for professional investors in the know, this is an added plus.
[05:50:57 PM] => Kelkar: What factors should investors take into account while investing in debt and gilt funds in the current scenario? How has the performance of IL&FS Mutual Fund been on these parameters?
[05:51:42 PM] => DS: We have fared fairly well in terms of performance with one year returns in excess of 17%, well above the sector average.
[05:52:26 PM] => What investors should be looking for has been answered by me above to a question posed by Vikas Sharma. We have been striving to maintain a high proportion of liquid securities in our portfolio as well as align our portfolio duration with interest rate views.
[05:53:47 PM] => We also maintain a high quality portfolio in terms of credit quality. Our Bond Fund currently has more than 90% in AAA securities or equivalent. An additional 7% is in AA+ securities. We do not hold any unrated security or security rated below AA-.
[05:54:31 PM] => Abyshakes: Could you share with us the investment philosophy of IL&FS Mutual Fund with regard to management of debt funds? What factors are taken into consideration while structuring the portfolio of a debt scheme?
[05:56:28 PM] => DS: We follow the following broad investment philosophy of delivering the labeled objective e.g. we don't chase returns in liquid funds, but maintain high levels of liquidity. In terms of the investment style we concentrate on interest rate risk management, maintenance of high portfolio quality,investment in benchmark liquid (easily saleable) securities.
[05:57:56 PM] => Myiris : That�s the end of the chat session for today
[05:59:54 PM] => Myiris : We thank you all for logging on
[06:00:09 PM] => Myiris : Our thanks to Mr Singh for sparing time to come on the chat session.
[06:00:24 PM] => Myiris : We�ll bring you more on Myiris chat masala
[06:00:34 PM] => Myiris : Till then its bye from us
