[04:26:49 PM] => Myiris: Good evening Ladies and Gentlemen!
[04:27:25 PM] => Myiris: Welcome to the Myiris Chat Masala with Mr. Udeshi!
[04:37:09 PM] => Disclaimer:
[04:37:28 PM] => Mr. Vineet Udheshie is the Vice President & Portfolio Manager, Debt - Alliance Capital Mutual Fund. At the time of this conversation / chat, Mr Vineet may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr. Vineet Udeshie 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. Vineet, 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.
[04:38:02 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.
[04:38:13 PM] => Lastly the views expressed by Mr. Vineet 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.

[04:39:47 PM] => vr_siva: Incase of Alliance Gilt Long term funds there is sudden increase in returns only in last two months when compared with other gilt schemes like Templeton or JM - Is there any change in the investment pattern and will this change increase the volatility and risk ?
[04:41:31 PM] => VU: No changes in investment pattern except that we have taken the portfolio long only now as we have managed to get a reasonable sized corpus, which ensures that at least one market lot can be bought.

[04:42:38 PM] => vineet_nahata: Will the bull run in Nav's of gilt and debt funds be sustained over a month or so?
[04:43:31 PM] => VU: Unlikely to do so. I think markets will now be stable and look for direction, which may come after the redemption of bonds at the end of the month.

[04:44:32 PM] => Aashish : Why dont you disclose the YTM of your entire porfolio (Debt & Income Schemes) ?
[04:46:35 PM] => VU: YTM for the portfolio makes little sense as this is only existing for a point in time . What happens to the YTM if I get a significant inflow the next day after YTM is released. Also YTM means Yield to Maturity. What is the maturity of a open ended debt fund which is perpetual.

[04:47:14 PM] => injun25in : Are index based equity MFs the best bet ?
[04:47:58 PM] => VU: Depends on the fund manager and his abilities. If he regularly is able to beat the index net of expenses then he is better than index based equity MFs. In emerging market scenario this is a better bet as active fund management works as opposed to passive fund management (index based). Passive strategy may work best in a developed market like USA where it is difficult to beat index.

[04:49:04 PM] => shara54: As far as my knowledge goes except UTI all the other AMC's have to maintain transparency in their working , but still is there a room for such default for other AMC also?
[04:50:32 PM] => VU: UTI's problems arise due to setting of sale repurchase prices, which were not NAV linked. Consequently the investors who redeem get more than what their investment is worth leaving the remaining investors to take a hit as has happened. If the NAV and sale/repurchase prices are linked then there is very little scope for such an event. I do not expect such an event in other AMCs, which are transparent and follow SEBI Guidelines.

[04:51:22 PM] => Shilpajain: Where do you place a Fixed income MF as an competitor to bank or as a complimentary to it?
[04:52:13 PM] => VU: As a competitor to the bank, we offer a product that you have to choose and compare with the bank deposits.

[04:53:42 PM] => Renuka: With this low interest rate regime the debt funds are able to give better returns than bank, but in future will this kind of returns continue? If no, why investors should invest in income funds than banks?
[04:55:34 PM] => VU: Returns from debt funds will fall as interest rates have fallen. These will be less than double digits from now on for the next one-year. However, we are confident that these returns will be higher than bank deposits especially on a post tax basis.

[04:55:47 PM] => Kamesh: Hello Sir , with this repeated US -64 scam, how will we again trust the MF industry as whole?
[04:56:30 PM] => VU: If you had trusted MF industry rather than US-64 then you would not be having the problem which you are having with US-64. MF Industry is well regulated and such an issue would not arise, as the MF industry is well regulated and transparent.

[04:58:38 PM] => Ayan: Sir, what do you see in the next 30 days, returns in debt fund and gilt fund?
[04:59:25 PM] => VU: We do not advise you to look at debt and gilt funds with a 30 day period of investment. You are following a risky path and your returns could be quite volatile. Do not extrapolate your returns in the past six months to the next 30 days.

[05:00:47 PM] => Kumar: Earlier only equity markets were volatile. Now debt markets too are volatile. Why is it so when in the past debt meant 100 per cent safety?
[05:01:45 PM] => VU: Debt markets are not as volatile as equity markets. However as debt funds too need to be priced like equity funds in order to arrive at a NAV. What if interest rates are volatile?

[05:03:17 PM] => Satyajit : What will be the impact of the interest rate cut by the US Federal Reserve on the Indian interest rates market?
[05:05:12 PM] => VU: No direct impact. Linkages exist however as if interest rates remain low and money tends to gravitate to higher returns. Then money would flow to higher return alternatives provided in emerging markets. Hence money can flow into India depressing rates here

[05:06:49 PM] => Kurien: Will the entry of pension funds benefit the debt market? How?
[05:07:14 PM] => VU: Yes. It will activate the long end of the yield curve as they will invest in that end of the curve in order to avoid duration mismatches.

[05:08:12 PM] => Shilpak: What are your views on interest rates for the current year?
[05:08:34 PM] => VU: In the current quarter I expect interest rates to remain stable to soft. Going ahead one will have to watch the fiscal deficit revenue collections etc to figure out how things will go.

[05:11:26 PM] => Abhay: Let me ask you a straight forward question. What kind of returns can investors expect while investing in your debt fund in current market conditions?
[05:13:00 PM] => VU: If you get double digit returns then this will be considered to be excellent. Returns can be calculated easily. Take a portfolio of 60% Corporate AAA bonds and 40% G-Secs.
[05:13:32 PM] => Assume a 4-year average portfolio maturity based on 3 years in corporate and 5 years in G-secs. Work out annualized returns today and make an assumption interest rates are stable, i.e, no capital gains/losses are assumed. This will give you the gross return on the portfolio, from this minus expenses and you get the return on the fund. My estimate for next one year based on the above is 8.00-8.50%

[05:14:11 PM] => S_bhambri: What are your views on the Fed meeting on July 21, 2001?
[05:14:58 PM] => VU The futures market is pricing in a 25 bps cut. However, our analysts in New York think that there is a less than 50-50 chance of that happening in this meeting.

[05:15:36 PM] => Amishree: Could you please let me know the old holding of equity & new holding of equity as in the revised one of the same.
[05:15:57 PM] => VU : I don't understand what you are trying to ask. Could you please rephrase your question

[05:16:20 PM] => Karthikaneni: Can I claim tax exemption for the money I paid for LIC Policy on name of my wife? She is not doing any job or business.
[05:16:43 PM] => VU: Please consult a tax expert. I don't know the answer to your question.

[05:18:17 PM] => Rosiepei1: What do you think about the new Alliance Millennium Fund. It has shown negative
[05:18:45 PM] => returns since a period of two years.
[05:19:11 PM] => VU: I think you should direct that question to Samir Arora. But my personal view is that this is the best sectoral/industry bet in the Indian Economy and we should all be invested in this sector.

[05:19:27 PM] => ramvenkat: What is the possibility of the stock market reviving in the next few months to come?
[05:19:40 PM] => VU : Please direct your questions to Samir Arora.

[05:20:34 PM] => Ashu_mf: Good afternoon sir, one of our clients has invested Rs. 20 Lacs in alliance MIP (Growth ) on 22nd June last year. Entry NAV was Rs 12.72. The scheme provides for a partial equity exposure. The last one year's returns do not make happy reading. All bond funds including Alliance Liquid Income has given super returns in last one year.
[05:21:08 PM] => After the introduction of alliance MIP (Bond ) fund, one feels tempted to switch over to the fund. I require an honest assessment of the situation from you. The investor is looking at a 3-5 investment horizon. My instinct suggests that I better stay with my existing scheme because I feel that the equity component would chip in with good returns in long term. Are some special efforts being made to bring alliance MIP back among the front runners?
[05:23:02 PM] => VU: The reason for launching Alliance MIP is to provide a debt fund with marginal equity to provide a kicker. As such you have understood the positioning well. In AMI we have had a bad patch last year due to the poor performance in the equity market. If the equity market does relatively okay (not so bad as last year) we will see the AMI beat the Income funds by a handsome margin.
[05:23:49 PM] => I personally feel that if your investor has money for 3-5 years horizon he is better off in the AMI with equity provided he is willing to live with the volatility in dividend payment. If however he wants lower volatility he should choose the bond option . This would however mean that he would have to settle for lower expected returns. Don't forget the higher the risk the higher the return and vice versa.

[05:24:31 PM] => Aashish: Why don't you disclose the Y-T-M of your entire portfolio (Debt & Income Schemes)?
[05:24:45 PM] => VU: Already answered earlier.

[05:24:58 PM] => Ali: What are the benchmarks used for evaluating the performance of your debt fund?
[05:25:41 PM] => VU Benchmarks to evaluate performance are ;
[05:25:53 PM] => Alliance G-Sec fund : an index like the I BEX or the JP Morgan Bond Index with duration profile in line with the duration of the fund.
[05:27:11 PM] => Alliance Income Fund. No benchmark exists in the market as yet. One would have to use peer comparison for now. However that is not the correct thing to do to evaluate fund managers performance as every fund manager manages funds in a different style and different levels of risk.

[05:27:44 PM] => Sunil: How do you reconcile the trade-off between credit risk and higher yields?
[05:28:23 PM] => VU : Frankly, in my opinion there is very little incremental risk in credits until AA- and you get paid handsomely for that risk. Although I don't have hard numbers to support my argument as of now I am sure that on a risk adjusted basis ratings like AA+ and AA outperform AAA.

[05:29:33 PM] => Menonb: I have opted for VRS. I wish to invest a part of the proceeds in debt funds. Should I invest in a gilt fund or in an income fund in the current scenario?
[05:29:54 PM] => VU: You should decide on whether income v/s gilt based on the following criteria;
[05:30:23 PM] => I) I) how risk averse you are.
[05:30:41 PM] => ii) II) Whether we are going to go in for a very bullish interest rate scenario and you want to take advantage of very long end of the yield curve which is only possible in gilt fund
[05:30:56 PM] => iii) III) The net expected holding period return based on NAV difference

[05:32:41 PM] => Shah: Do you feel the repeated interest rate cut by the US Federal Reserve will have an impact on the Indian debt market?
[05:33:00 PM] => VU: We have already seen some of the impact in the form of reduction in bank rates and softening of interest rates locally.

[05:33:40 PM] => Msonali: Do you see a 6% GDP growth?
[05:33:56 PM] => VU: Yes

[05:34:12 PM] => Amit: Do you expect any volatility in the forex markets? If it happens will it lead to an upward bias in the interest rates movement?
[05:34:35 PM] => VU: Not in the near term. The RBI has enough FX reserves to control this with USD 43 billion in reserves and very high control over a shallow market. Although the rupee looks overvalued on a REER basis the depreciation will be engineered to be gradual.

[05:34:50 PM] => Rajeshp: If the interest rates do not fall further then can income funds give returns as they have been giving the last few months?
[05:35:08 PM] => VU : No. If interest rates stabilize then returns will stabilize at 8-8.5% levels. Only if interest rates keep going down can such high returns be sustained. However in my opinion we are likely to see stable interest rates rather than a down ward move from here on.

[05:35:21 PM] => Dinesh: What are the reasons for the high inflows into debt schemes in the last few months? Is it because of the concessions announced in the budget and cut in the small savings rate?
[05:35:44 PM] => VU : Very clearly deposit growth is strong and so are inflows in to mutual funds as they are fleeing equities and moving in to safer investments. Having said that a strong reason for MF growths is the tax based incentives as also the acceptance by investors of debt mutual funds as a good place for them to invest their money in light of a falling interest rate scenario.

[05:36:14 PM] => Sharad : Do you foresee the Sensex touching the high of 3569 as mentioned by a few techies?
[05:36:38 PM] => VU: I am not an expert on equities and frankly I don't believe in technical analysis. Also I never believe that it is a wrong time to invest in the Sensex. Start saving early if you are saving.

[05:37:03 PM] => Yuyutsu : My friend who works for a mutual fund tells me that retail participation is low in debt funds. It is corporates and institutions, which account for 70-80 per cent in debt funds. Is it true?
[05:37:24 PM] => VU : It is high but not to that extent.

[05:38:42 PM] => Pankaj: What is your view on Indian economy going forward?
[05:38:54 PM] => What growth rate do you expect?
[05:39:46 PM] => VU : The Indian economy is right now in a state of flux. Certain sectors like software and knowledge based industries are doing well. However the rest of the industry is still grappling with changes being brought about by WTO.
[05:41:29 PM] => There are still significant problems in government finances and the structure of taxation and subsidies and infrastructure.. I think we have a long way to go and to discuss all the aspects of the economy will take a long time. CMIE has yesterday forecast a growth rate of 6%+ and I will go with that.
[05:44:08 PM] => VU : For all of you who have sent in their queries and questions, any further clarifications that you might require, please feel free to mail in and ask me. I shall be more than happy to reply

[05:51:42 PM] => AM_G : I want to buy 200 shares at CMP, should I go ahead? I am willing to hold it for an year. Also please advise me on TIPS Industries
[05:52:18 PM] => VU : I am sorry but I would not be able to advise you on equity investments.

[05:52:41 PM] => gunajnkapoor: Which is the best gilt fund in the market today?
[05:53:17 PM] => VU : Of Course Alliance ha ha! On a more serious note you should choose a gilt fund based on its returns adjusted for risk. The first is measured by the holding period return over the last 3 months 6 months etc.
[05:54:04 PM] => The risk is measured by the Standard deviation or variance of the NAV. Divide return by risk and the one with the highest number is the based. However be advised that past performance is not a measure of future performance.

[05:55:05 PM] => Mihir Marfatia : What is the index level you see 6 months from now?
[05:57:43 PM] => VU : On equities I am not the right person to direct your question. However the index is immaterial unless you are buying the index or its derivatives. You should bother with the value of your portfolio and the stocks you own.

[05:58:23 PM] => Shashwat : A dividend reinvestment option in a Liquid fund having weekly pay-outs is quite suitable for the investor, why is it that most schemes besides Birla do not offer such facilities to investors (Alliance included)?
[05:59:25 PM] => VU : I would like to inform you that you have wrong information. We do provide a dividend weekly with reinvestment in our liquidity fund Alliance Cash Manager. Please contact our sales guys at 91-22- 4978000 or your distributor if you are interested in such a fund.

[06:00:10 PM] => Dinesh : What are your comments on the bailout package being effected for UTI? Is it a healthy sign or should the government had kept it's hands off.
[06:00:56 PM] => VU: I think the bail out package is good for small investors and they will most likely stay on as they are assured of incremental returns and liquidity. However, in such a package the loser is the investor who has more than 3000 units. What does he do?
[06:01:55 PM] => If these investors had realized and recognize about UTI's non-transparent methods of pricing and fund management much earlier they would not have been in the soup they are today. If they had realized that private sector Funds provide the transparency and invested in them rather than UTI they would not have had this problem of inflated repurchase prices.
[06:03:07 PM] => Investors should realize that there is no free lunch and if someone is leaving at prices higher than NAV then some one is losing. Wise Chinese saying in the markets: Look in the market for a fool. If you cannot find one they understand it is you!
[06:03:39 PM] => I think the government could not keep off as it requires too much political will and they would have had serious problems if they did so.

[06:04:32 PM] => Mona : US-64 crisis is a wake up call for all of us (investors). If UTI can default what is the guarantee you won't?
[06:07:46 PM] => VU: UTI defaulted as it dug its own grave. By giving out repurchase option, to investors knowing fully well that it was at prices much higher than its NAV, they were only compounding their problems which primarily arose from the mismatched asset allocation, with a bias in favour of equity, (arising out of peoples' expectations of a debt like steady return).
[06:08:57 PM] => In private sector MFs there is a very high level of transparency. We disclose portfolio every month and NAV every day. Our sale repurchase prices are only based on NAV. At Alliance we only do fund management globally and our reputation and track record is only what speaks for us and hence we have to do well.
[06:09:59 PM] => Having said that, I wish to advise investors that they should understand the investments that they are making. Understand the risks you are getting into, and what returns you can expect from the risk level you are taking. Don't have unreasonable expectations and you will not suffer. Some axioms for investors to follow:
[06:11:03 PM] => Risk and return go hand in hand. The higher the risk the higher the return.
[06:11:50 PM] => There is no free lunch in the markets. If something looks too good, it is!

[06:13:36 PM] => Shailesh : Has liberalization really helped, when all I can see around are workers being laid off? Weren't we better in socialism?
[06:17:10 PM] => VU Yes we are better. You may see some workers being laid off. However that is because that is very visible and is restricted to industries that are dying. You however do not see the larger number of people who are increasingly getting jobs and being gainfully employed. There is more prosperity all around. Consumers have more choice and wherever liberalization has introduced competition you have seen the impact of increased efficiency. Take for example telephones.
[06:19:19 PM] => At one time you had long waiting lists. Today you can get it on demand and you are not at the mercy of the MTNL. This is just one example. There are many others. This is the best path. Just think if the financial sector was not liberalized UTI would have continued in its wrong ways and you would not be able to invest in better MFs like Alliance or any other private sector MF. You would continue to bank with a bank with poor services standards. I hope you are convinced.

[06:21:41 PM] => Ashok : What is the relationship between interest rate and return? I am a layman. Will you take time to explain?
[06:23:03 PM] => VU: Interest rate is the cost of money. That is, it is the price you are earning for forgoing spending the money today on something you want to buy, You are willing to spend that money in the future and for that deferment of the enjoyment you are being paid. Someone else is using your money and hence is paying you for it.

[06:23:53 PM] => Bappu : I lost money in your New millennium And Alliance equity fund. Shall I now average or put money in debt fund.
[06:24:12 PM] => VU Please be a disciplined investor. Decide on your asset allocation based on your time horizon risk appetite etc., then stick to it. If you are under-invested in a specific asset class top that up and vice versa.

[06:25:03 PM] => Neeraj : What really went wrong with US-64? What will be the impact of the US-64 crisis on the MF industry?
[06:26:19 PM] => VU: What went wrong is well documented, and also covered in earlier question. Impact of US-64 crisis on MF industry: I think people will realize that they should only invest in a transparent fund like a private sector fund. Events like this are also forcing people to realise that there is no free lunch for e.g. guaranteed return funds like UTI MIPs. In fact even UTI is no longer going to launch such funds. The MF industry only benefits.

[06:28:17 PM] => Rajalakshmi : What would you recommend for long term Gilt fund in terms of average maturities given the fact that prices have peaked?
[06:28:56 PM] => VU: I have already shortened my Gilt fund maturity significantly and brought most of it to cash and 3 year paper.

[06:29:45 PM] => Yuyutsu: I have noticed that mutual funds do not allow "automatic" pumping of returns of one scheme into another scheme. For example, returns of MIP to Equity schemes. Why this is NOT allowed. It will save lot of transaction costs to investor and fund.
[06:30:01 PM] => VU : I am not too sure what you mean by automatic pumping of returns.

[06:30:19 PM] => Paul : As an investor looking at debt funds, what kind of return can I expect over a one year time frame from well managed income funds?
[06:30:40 PM] => VU: I have already answered this earlier. If interest rates remain stable then 8-8.5%

[06:30:58 PM] => Prashant : How is Kochi ref. Stock is there any chance to buyback or takeover of BPCL may offer open price
[06:31:14 PM] => VU : Sorry, but I am not able to answer questions on individual stocks.

[06:31:54 PM] => Jaggi : Sir, in this US 64 bailout if an investor gets out at Rs 10, the trust will be losing Rs 2 per investor. Who will pay for that Rs 2? Who is bailing it out. I fail to understand it.
[06:32:44 PM] => VU : The government has said it will step in. I guess is not very clear to me either . I guess they are hoping that not too many investors ask for their money in light of the incremental returns being offered.

[06:33:06 PM] => Balu : You just mentioned that your estimate for return of a fund is 8 to 8.5% (assuming no capital gains / losses). That is less than a fixed deposit! (which is at around 9 - 9.5%)
[06:33:24 PM] => VU : Yes, but on a post tax basis assuming a 30% tax rate this will be higher for MF. Also in MF there is no lock in and you have liquidity. Lastly 9- 9.50% returns will not last on fixed deposits.

[06:33:44 PM] => Vijendra : Does it make sense to put money in debt funds when senior citizens can get 1% extra on FDs? Post tax , even with this 1% handicap can MFs beat bank FDs for a senior citizen?
[06:34:06 PM] => VU :Yes, based on your tax status you may be better off in MFs as I mentioned in the last question.

[06:34:34 PM] => Shashwath: There are no dividend re-investments options available to your debt funds, especially the alliance cash manager?
[06:34:47 PM] => VU : Yes, there are in the Alliance Cash Manager.

[06:35:13 PM] => Aparna: Hello sir, please tell me difference between average maturity and duration of a portfolio.
[06:35:34 PM] => VU : Average maturity is the weighted average of the time to maturity with rupee values as weights

[06:35:44 PM] => Monica_ iips: Sir, what are your views on Visualsoft Technologies.
[06:35:55 PM] => VU : Sorry but I am not in a position to provide answers to specifics stock related questions.

[06:36:20 PM] => Apurvi: Looking at the way, correction have come in the Gilt scheme, what is the strategy that should be followed by an investor planning investment in the Income Fund or the Gilt Scheme? Is any further correction expected in the market?
[06:36:32 PM] => VU : This is a short term correction and is from very overheated levels. It is good for the markets which were going one way. Please stay invested unless you need the money in the very short term

[06:36:59 PM] => Jamshed: Do you see corporate borrowing picking up in the next six months - Where are the government announced projects? When is this so called artificial low interest rates going to change?
[06:37:18 PM] => VU : Not really. Most of the corporate demand is refinancing of earlier borrowings at lower rates. If the government starts borrowing too much then we will see rise in interest rates because as of now not much corporate demand exists.

[06:37:30 PM] => Hassan69: How much badla money has actually come into the debt mutual fund market?
[06:37:40 PM] => VU :I don't have an answer to that.

[06:38:03 PM] => Jansher70: If there is volatility in Forex we normally see volatility in interest rates. Where would you put interest rates if you saw the rupee break Rs. 48 barrier against the dollar. Where do you see the Rupee by September 2001?
[06:38:23 PM] => VU : The issue is volatility. In my view if it is a gradual fall then there is no problem. Only if the fall is sharp and sudden does the RBI hike interest rates and sentiment in the bond market goes for a toss. It would be very difficult to predict both the exchange rate at a particular time. My best guess at the current moment is 47.50 by end September but one day is a long day in the forex market.
[06:38:43 PM] => VU : Thank you every body for logging in and making it an interesting chat session. Remember there is no free lunch in the financial markets !

[06:39:25 PM] => Myiris: Ladies and Gentlemen, Mr. Udeshi has just answered the last question for this session.

[06:41:02 PM] => Myiris: We thank him for his time for a very enlightening Chat Session. I am sure we will all remember his advice and suggestions...There is no free lunch in the markets!

[06:43:37 PM] => Myiris: Please do join us on the 23rd of July '2001 for a Chat with Mr. Nandkumar Surti, Head-Fixed Income, JM Mutual Fund.

[06:43:55 PM] => Myiris: Thank You and Good Bye!