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"We are expecting inflation to cool off below five per cent" - Yadnesh Chavan, Fund Manager, Mirae Asset Global Investments

| 5/16/2013 9:00 PM Thursday

  • Since the debt market has rallied too much with the 10-year GSEC at a near three-year low, investors can time their entry into long duration funds as the confidence in the economy is based on the government’s deficit and rate cut expectations from the RBI. Until then, investors can look at short-term bond funds where they can keep earning decent returns with a limited interest rate risk.
  • Equity and debt markets work on the same set of fundamentals. The basic macroeconomic fundamentals work in a similar manner but some events can affect both the markets in different ways in the immediate term. One difference could be the return differentials which are lower in debt, and hence the debt fund manager has to be on his toes for managing interest rates and credit risks.

Looking at the higher yields in the Indian bonds, along with expectations of a stable INR, a lot of foreign investors will invest in India, says Yadnesh Chavan, Fund Manager - Fixed Income, Mirae Asset Global Investments (I), in an interview to Saikat Mitra

With respect to the Indian debt markets and Indian investors, how challenging do you find the fund management industry?

Indian investors have various options for debt investments. A large chunk of debt investments are channelised into bank FDs, PPF or other government savings products with tax benefits. In this environment, it is challenging to get the mindshare of retail investors. However, mutual funds have started gaining traction in FMPs and income funds. 

What is the difference between managing funds on the debt side and on the equity side?

Debt funds are managed while taking into consideration the macro environment of the economy whilst equity is more bottoms-up stocks picking with an overlap of macro indicators.

Debt funds are not that as popular as equity funds among retail investors. So as a fund management house, what are you doing to popularise debt funds?

Compared to many foreign countries, interest rates in India are on the higher side. We are trying to provide simple products with low credit risks for investors to increase the penetration of debt funds.

Do you follow any particular investment philosophy when you talk about Mirae Asset as a fund house?

The basic fundamental principle that we follow at Mirae is ‘Clients first’. With this philosophy in place, we are offering products based on clients’ risk appetite and time horizon of their investments.

 

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