Transcript of Chat with Mr.Sandesh Kirkire,senior vice president, head - fixed income & security investments
- 12th July 2002
[04:33:10 PM] => Myiris: Welcome to the live chat session.
[04:35:01 PM] => Myiris: Welcome to the live chat session.
[04:43:27 PM] => Myiris: Our guest today is Mr. Sandesh Kirkire, senior vice president, head - fixed income & security investments, Kotak Mahindra Mutual Fund.
[04:45:22 PM] => At the time of this conversation / chat, Mr. Kirkire may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr. Kirkire 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. Kirkire, 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.
[04:46:03 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.
[04:46:13 PM] => Lastly the views expressed by Mr. Kirkire 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.
[04:46:20 PM] => Myiris: Welcome to the chat session, Mr. Kirkire
[04:49:01 PM] => tushar: What is your outlook on the debt markets for the short-to-medium
[04:49:35 PM] => We expect the debt markets to remain stable with a softening bias in the short-to-medium term.
[04:51:01 PM] => binc: What kind of returns can investors expect from income funds over the next six months to one year?
[04:52:16 PM] => SK: We believe income funds can produce returns in the range of 7-9 per cent for periods of six months to one year.
[04:53:05 PM] => surekh: Would debt funds give more returns than bank deposits, post-tax? What are the advantages of debt funds over traditional bank deposits?
[04:53:49 PM] => SK: The return that you get from debt funds is either in the nature of capital gains or dividends. The dividends now being taxed on par with the traditional bank deposits do not have any tax advantage. However, capital gains continue to have tax advantage over bank deposits and hence are superior to bank deposits. Further, income funds operate at a small cost of about 1.50 per cent while the cost incurred by an investor in bank deposits is much higher. Income funds therefore would give returns higher than bank deposits.
[04:55:23 PM] => trupti: What are the new schemes Kotak is planning to launch this year?
[04:56:31 PM] => SK: We propose to launch a hybrid fund having predominant investments in debt and small investments in equity. Investments in equity would act as yield enhancers to basic debt investments. We are also planning to launch a US Treasury Fund, a mid cap fund and a floating rate fund in the coming year.
[04:57:36 PM] => s_79: What factors should investors consider when investing in debt and gilt funds in the current scenario?
[04:57:57 PM] => SK: All debt schemes are different portfolios each having a different risk. Each scheme is positioned across a different investment horizon. As for Kotak Mahindra schemes; we recommend investment horizons of overnight to a month for K Liquid; one-six months for K Bond Short Term Plan and above six months for K Bond Wholesale/Deposit Plans. In the gilt category, we recommend investment horizons of three-six months for K Gilt Savings Scheme and above 12 months for K Gilt Investment Plan.
[04:58:27 PM] => sun_cool: At present, what percentage of the average daily lendings can mutual funds lend in the call money market?
[04:58:42 PM] => SK: At present we can lend 85% of our average lending of the period 2000-2001 in the call money market.
[04:58:54 PM] => sach: With regard to positive interest rate outlook, do you see mutual fund activity pick up in the corporate debt market?
[04:59:07 PM] => SK: Yes and in fact the corporate debt market has already become quite active.
[05:02:48 PM] => kk: Can you elaborate on the suitability of various debt products for investors having different investment time horizons?
[05:03:58 PM] => SK: I think I have already elaborated this in an answer above.
[05:04:42 PM] => sp: Do you see corporate debt issuance pick up in the near term?
[05:05:48 PM] => SK: Yes we expect more supply from the corporates. But mind you as there are no new projects on the anvil, these supplies are mainly for replacing the earlier issued high cost debt or for the purpose of working capital.
[05:06:54 PM] => dar: Which is the most traded G-Sec paper?
[05:07:44 PM] => SK: Currently the most traded G-Sec paper is 7.40% 2012.
[05:08:34 PM] => ash: On what basis are spreads between corporate papers and similar maturity g-secs calculated?
[05:09:42 PM] => SK: Spreads are the difference in the yield of the g-sec vis-a-vis the similar maturity corporate paper. These spreads vary for different rating category as also for different corporates within the rating category. It is also important to bring yields between both the g-secs and the corporate paper on the same base as g-secs yields are quoted on an semi-annual basis while corporate yields are quoted on an annual basis.
[05:11:02 PM] => rehs: Is there a high correlation in trading activity between g-secs & corporate papers?
[05:11:33 PM] => SK: The g-sec market continues to have very high trading volume. We have seen corporate paper activity rising when the g-sec trading activity is high.
[05:12:32 PM] => viju: What is the average maturity of your debt funds?
[05:14:27 PM] => SK: The average maturity of K Bond is about 4.70 years, of the Bond Short Term Plan is about 250 days and of K Liquid is about 90 days.
[05:14:50 PM] => pal79: Do you actively churn your portfolios?
[05:15:38 PM] => SK: As debt market activity is more concentrated in g-secs, churning is more in the g-sec holding. However, we do not churn more than 5-10 per cent of the portfolio.
[05:16:43 PM] => Sairam: What are the factors to be considered? How does the RBI Bonds scheme work and where do I buy them from?
[05:18:39 PM] => SK: The RBI bonds is a Central Government issued instrument providing 8 per cent tax-free return to investors. The maximum that an investor can invest in these bonds is up to Rs two lakh in a financial year.
[05:19:50 PM] => Bhabhani: How does the duration and convexity help in investment decisions?
[05:20:46 PM] => SK: The duration of the bond indicates the price sensitivity of the bond vis-a-vis the movement in interest rates. At the portfolio, the weighted average duration indicates the risk level that we propose to carry on the portfolio. Convexity measure is normally used while comparing two different bonds having similar duration; a higher convexity would be preferred as convexity is a positively correlated function while duration is a negatively corerelated function to interest rates.
[05:21:48 PM] => Cvejani: How is conclusion drawn from finding the spread between G-secs, yield curve and implicit forward rate curves?
[05:25:37 PM] => SK: The forward curve is essentially an indicator of an interest rate differential between two currencies while the G-sec curve is essentially the building block of the rupee interest rate curve. The gap between the two curves essentially does indicate the interest rate differential between the two currencies.
[05:27:47 PM] => Sita: What is the best way for the normal investor to invest in debt or equity as on today`s date or normally what is the best time to enter the market?
[05:29:54 PM] => SK: The normal investor can invest in both sides of the capital market viz debt and equity through the mutual fund route. He would of course be required to monitor his portfolio and rebalance the portfolio with regular frequency.
[05:31:45 PM] => Myiris: That is the end of the chat for the day.
[05:33:44 PM] => Myiris: Thank you all for logging on and sending in your queries.
[05:35:50 PM] => Myiris: We thank Mr Sandesh Kirkire for his time & valuable inputs.
[05:36:16 PM] => Myiris: Bye for now...wish you all a happy weekend!
