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| Transcript of Chat with Mr. Prashant Jain, Chief Investment Officer, Zurich India Mutual Fund - 29th Oct 2001 |
[04:28:37 PM] => Myiris : Welcome to the live chat session.
[04:32:36 PM] => Myiris : Mr. Prashant Jain will be joining us shortly.
[04:33:08 PM] => DISCLAIMER :
[04:34:02 PM] => Mr. Prashant Jain, Chief Investment Officer, Zurich India Mutual Fund. At the time of this conversation / chat, Mr. Jain may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr. Jain 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. Jain, 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.
[04:34:26 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.
[04:34:48 PM] => Lastly the views expressed by Mr. Jain 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.
[04:35:26 PM] => Myiris : Welcome to the chat session Mr. Jain.
[04:36:08 PM] => paolomee_dagli : How safe is balanced funds?
[04:36:44 PM] => PJ : Balanced funds are safer than equity funds and riskier than fixed income funds. Generally equities are more risky than bonds and hence a product which invests in both is in between equity and bond funds.
[04:37:24 PM] => Mohammed Ali : How has been the performance of your balanced fund?
[04:39:22 PM] => PJ : I could be biased, but in my opinion (and numbers justify), it is one of the best performing funds. Over the last 3 and 5 years , the fund has generated nearly 16% and 18% p.a. returns respectively whereas over the last one year the fund has lost 11%, which again is quite reasonable compared to both the markets and peer group.
[04:41:11 PM] => MariaG : Could you elaborate on your investment philosophy?
[04:41:56 PM] => PJ : Market feels that we have a conservative investment philosophy, we feel we are disciplined, we are realistic. The key to building capital in my opinion is not in earning high returns in short periods of time, but in earning real returns (more than inflation) in most periods of time and in avoiding large losses. One large loss can wipe out returns generated over years and set you back a long time. Consider this for Rs 20 to become Rs 100 a return of 400% is required which may take few years , but for Rs 100 to become Rs 20 only a 80% loss is required which can happen over a few months! This can be referred to as the negative power of compounding!
[04:43:56 PM] => Following from the above we keep a few thing in mind when we invest.
[04:45:06 PM] => 1. We must maintain the product sanctity - that is a diversified equity fund must remain one, a balanced fund must remain balanced and so on. The client is doing some asset allocation at his end. So if I mess up with the positioning of the product and if an equity fund starts looking like a sector fund, there is no need to offer sector fund by itself. Similarly if a balanced fund starts taking 80-85% exposure to equities, where is the need to offer a balanced fund? So we don�t succumb to short term pressures, we maintain the product sanctity. There is no gap in our case between what we communicate, what we write and what we actually do.
[04:45:53 PM] => 2. Across board, our investments are in quality companies, companies which have sustainable businesses. If we don�t understand a company, we will not invest in it. We will not invest in a company, which we don�t believe in, just because it is going up. We will work on it and will definitely study it. And if we are convinced, we will buy, if not then we will stay away. Thus even at the peak of the boom, we did not invest in sub-standard companies because we were not convinced.
[04:46:42 PM] => Mahendrakh : What would be an ideal asset allocation for an investor?
[04:47:42 PM] => PJ : Depends on your circumstances and risk profile. If your risk taking capacity is higher and time horizon longer, equities are preferred. Vive versa for fixed income.
[04:48:18 PM] => Priyesh Sharma : We would like to know future outlook of IT, Pharma, FMCG sector?
[04:48:55 PM] => PJ : In the long run , share price growth will profit growth.
[04:50:01 PM] => FMCG is a very steady sector, the profit growth is likely to average between 10-20%, and so should the returns of the sector. In IT whereas there should be reasonable growth in the medium term, in the long run margins should come under pressure resulting in poor profit growth. In view of this, it is difficult to assess the prospects which would vary from company to company. Outlook is good for Indian Pharma cos - opening of generics market and possible success on the r&d front can result in susstantial growth in profits. Thus despite the run up, there is still significant potential.
[04:51:20 PM] => Mittal_S: I have put in money in the growth fund of a leading company. Now the NAV has depreciated very much. So should, I wait or exit out of it and put it in some of the income fund?
[04:52:26 PM] => PJ : If the fund is well managed (my definition is a diversfied portfolio of large and good quality companies) and if you are not over exposed to equities, then you should not switch to income at this point of time, This is because, in my opinion, equities should do better in the medium term over bonds.
[04:53:17 PM] => Joshua : Which sector would be the next fancy of brokers in the near term after Pharma?
[04:54:05 PM] => PJ : Difficult to say, we like cement, select auto and PSU stocks.
[04:56:29 PM] => Ramnath : Now that the US economy is in a recession, where do we go from here?
[04:57:38 PM] => PJ : The impact of the slow down in US should be marginal on India. This is because our exports as % of GDP are very low.
[05:00:42 PM] => Meena Shah : Can you tell me the current cash levels in each of your funds?
[05:05:07 PM] => PJ : Pls refer to the monthly fact sheets; also available on our website.
[05:05:27 PM] => Kurien.kt : Given the current scenario, what do you recommend to invest in - old economy or new economy?
[05:06:13 PM] => PJ : Old and new are misnomers - what matters is sustainability, growth and vaauations. We think the sustainability is more in old.
[05:07:11 PM] => Tushar-H : Why should I invest in a Mutual Fund when most funds perform as miserably as they do in India?
[05:08:24 PM] => PJ : In my opinion, it is wrong to generalise. In my opinion, some funds have definitiely added reasoanble value over the medium term . Fact is the equity markets have not been good over the last 8 years or so. Lastly, in case of investments in tech funds, the investor must also take his share of the blame as he decided to invest in a sector which has not done well.
[05:10:05 PM] => Swati : What do you think for the market in a one-month horizon?
[05:10:50 PM] => PJ : The shorter you think, the more difficult to estimate future. I do not wan�t to hazard a guess. Your guess will be equally good.
[05:11:35 PM] => Abhijeet : Where do you see the media entertainment companies headed to?
[05:12:29 PM] => PJ : It will take a long time for these companies to acquire a critical mass and magamenent depth to make them less dependent on few individuals.
[05:13:39 PM] => Sanjays : How do you rate the monetary policy on a scale of 1 to 10. Is there anything for the small investor?
[05:14:20 PM] => PJ : Small invesotr has to reconcile himself to lower interest rates (though real rates are reasonable), as inflation is down and there is poor demand for capital.
[05:14:45 PM] => Pushkar : Which are the sectors that you are bullish about and where are you bearish?
[05:16:03 PM] => PJ : Auto, Indian Pharma, select FMCG and cement are the sectors where I am positive.
[05:16:56 PM] => krishnamurthi : What is your opinion on the prospects of the Bajaj Auto scrip?
[05:19:06 PM] => PJ : I think it is a reasonable investment; however it always pays to maintain a diversified portfolio.
[05:19:46 PM] => pullaraog : Can I purchase the scrip Pentafour Technologies at this price?
[05:21:02 PM] => PJ : I cannot comment; we have not studied the company is detail.
[05:21:49 PM] => Hariharan : What are the target returns you are planning for Prudence fund?
[05:22:35 PM] => PJ : I could be biased, but in my opinion (and numbers justify), it is one of the best performing funds. Over the last 3 and 5 years , the fund has generated nearly 16% and 18% p.a. returns respectively whereas over the last one year the fund has lost 11%, which again is quite reasonable compared to both the markets and peer group.
[05:23:49 PM] => In the last 5 years, the fund has delivered 18% p.a. return in bad equity markets. That is a reasonable guide, though in equities the past is not always a guide for the future.
[05:24:29 PM] => Marat 32 : Do you subscribe to the view that mutual funds industry in India is yet to mature?
[05:25:27 PM] => PJ : There is nothing like absolute maturity or immaturity; however, it is true, that mutual funds are in the initial growth phase.
[05:26:23 PM] => Suraj : What are your views on second rung IT stocks? Will they survive?
[05:27:12 PM] => PJ : Difficult to take a call, I think the good quality ones will definitely survive, whether they can grow as above average industry growth remains to be seen, in my opinion, though, the larger cos should grow faster.
[05:29:04 PM] => Anita : What are your preferred investment sectors in the current market conditions?
[05:29:33 PM] => PJ : Already answered earlier.
[05:31:08 PM] => Sudha Kumar : Do you forsee a scenario with the tech stocks coming back in a big way in the near future?
[05:33:04 PM] => PJ : Not in a big way.
[05:33:49 PM] => Abhishekinc: Are mutual funds allowed to trade on futures? If so is there a cap on their investment in futures? Also how do you feel this will affect the market?
[05:34:56 PM] => PJ : Yes, they are as per limits specified in the offer document. I do not think futures by themselves will aid or hinder performance by themselves.
[05:36:00 PM] => NeerajG : What is the future for mutual funds?
[05:36:35 PM] => PJ : I think, very bright.
[05:37:35 PM] => Irani : Is it a good time to invest in technology stocks?
[05:40:19 PM] => PJ : Despite higher growth possible in the medium term, the long term sustainability of margins is difficult for the sector; the best is to maintain some exposure to the sector through reputed cos.
[05:41:24 PM] => Tapas : Do you see interst rates coming down further?
[05:42:49 PM] => PJ : Yes, I do, though the high controlled rates like RBI relief bonds, small savings etc, will provide resistance to sognificantly lower rates unless these are brought down, which should happen in my opinion over the next few months.
[05:43:30 PM] => Akash : What are your views about the media sector? What about Zee Tele?
[05:44:26 PM] => PJ : Media sector is not yet mature in terms of management maturity and viable models that are not too dependent on key individuals. Zee tele is reasonable valued; the issue is if they are able to regain viewership, then the stock should do well.
[05:45:49 PM] => Guest : Your views on ICICI-ICICI Bank merger?
[05:46:06 PM] => PJ : Views would vary depending on what perspective you are looking at this - a shareholder, a bond holder etc. Standalone ICICI Bank would have created more value for its shareholders in my opinion than the merged entity in the long run.
[05:47:46 PM] => Mano_98 : When do you see a reversal in the interest rate trend?
[05:48:40 PM] => PJ : It is extremely to forecast interest rates, however as of now there is no indication that rates should start going up.
[05:49:42 PM] => Raghu : Is Zurich AMC planning to launch any new schemes?
[05:50:15 PM] => PJ : We are planning some as and when we find a viable idea, we shall launch it. If you recall, we were one of the very few AMC�s not to launch a tech fund as we did not believe in it.
[05:51:15 PM] => Ghosh : Looking at your portfolio I can see a lot of auto companies in that list. would you comment?
[05:53:25 PM] => PJ : We are positive on these cos and we feel that these are reasoanble well managed cos, with decent growth that are available at reasonable valuations.
[05:55:06 PM] => Myiris : That's all we have time for in this chat session.
[05:56:24 PM] => Disclaimer : Mr. Prashant Jain has no personal interest in the securities or sectors discussed in the chat.
[05:56:52 PM] => Myiris : We thank you all for your participation.
[05:58:00 PM] => Myiris : Thank you Mr. Jain for a very lively chat.
[05:58:33 PM] => Myiris : Thats it from us for today..bye for now
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