Mr. Ved Prakash Chaturvedi, Managing Director, Tata Asset Management Ltd

Mr. Ved Prakash Chaturvedi, Managing Director, Tata Asset Management Ltd has worked with various leading financial services organisations in India. These include CRISIL (Indian business of Standard & Poors), Banque Nationale De Paris, SBI Funds Management. Mr. Chaturvedi has a Bachelor’s Degree in Electronics Engineering and an MBA from the Indian Institute of Management, Bangalore. Chaturvedi is also a Director on the Board of Association of Mutual Funds in India (AMFI), Member of the SEBI Advisory Committee of Mutual Funds, Member of the Capital Market Committee of the Indian Merchants’ Chamber (IMC) and a Committee Member of the Confederation of Indian Industry (CII) National Committee on Mutual Funds.

Tata Mutual Fund manages around Rs202bn (average AUM for the month) as on September 30, 2009 worth of assets across its varied offerings. Tata Mutual Fund offers an investment option for everyone, whether you are a businessman or salaried professional, a retired person or housewife, an aggressive investor or a conservative capital builder.

Replying to Yash Ved of India Infoline, Ved Prakash Chaturvedi says, “Economic growth in many emerging markets has decoupled from the economic growth in developed markets.”

What is your view on the Indian stock markets ?

In our view an incipient recovery is under way in the Indian equity markets. However, there are apprehensions with respect to the deficient rainfall and with respect to the Chinese and global situation. On balance, global sentiment determines fund flows to emerging markets and to India and hence will continue to be a driver of market levels here.
Equity markets do not go up or down in a straight line. We have seen a very sharp run-up in our equity markets in the last few months. There will be possibly a period of consolidation and then based on the outlook for earnings growth from companies markets will move ahead.
Most analysts expect that fiscal year 2010-11 will be a year where we can expect EPS growth from companies as business confidence returns. If this scenario materializes, then we can expect some good cheer in Indian equity markets over this period.

What is your view on the Indian and global economy?

If evidence of the last 24 months is to be believed it does seem that economic growth in many emerging markets has decoupled from the economic growth in developed markets. In fact, for 2009 it seems that most of the global growth will actually come from emerging markets. However, it needs to be remembered that the largest pool of capital still lies with developed economies. Thus, investment flows into emerging markets continue to be driven by sentiments prevailing in developed markets. Thus, though economies have decoupled market movements still bear co-relation to developed market movements owing to the fact that sentiment there impacts fund flows and sentiment in emerging markets. This situation is likely to continue for some more time.
We cannot comment on the outlook for economic growth in developed markets as we do not track those markets proactively. However, our general view is that once the uncertainties of the global economy slowly fade away, business confidence and consumer confidence across the globe will slowly recover.

How do you see inflation and interest rates going ahead?

The coming few months will possibly see focus on inflation. It is a fact of life that when too much liquidity is injected into our system and money supply increases while the supply of goods and services do not increase proportionately it is a driver of inflation. It should also be kept in mind that since in our country inflation is measured on a year-on-year basis, the “base effect” will also cause headline numbers of inflation to start looking up as we go into 2010. The drought situation is also to be considered. Thus, inflationary expectations are likely to return in the next 18 months at some point of time.

How much schemes are you currently dealing with?

We currently have a range of 38 investment schemes – 20 Equity schemes, 14 Debt & Cash schemes and 4 Balanced or Hybrid schemes.

What is your view rupee on the rupee?

Over the long period of time, the rupee and emerging market currency should strengthen against the US dollar. But in short time frame, things will be more volatile.

Which of the sectors you are bullish?

We are positive on infrastructure, construction, engineering and capital goods.

Your message to the retail investors?

Our message is that long term story in India is very good as growth rates are likely to continue. Investors should understand risk appetite and carefully invest so as to benefit to growth of Indian economy.

Source: http://www.indiainfoline.com/Research/LeaderSpeak/Default.aspx?ReportNo=720

Diversification of assets overseas is must for portfolio

Nakul Karnik, an IIM graduate and an analyst with a knowledge processing outsourcing unit, tracks the Middle East and North Africa (MENA) markets. He believes that there are strong growth opportunities there. Putting his money where his mouth is, Karnik has invested some of his savings in exchange-traded funds listed in the US. These funds track opportunities in the MENA markets and have made Karnik good money.

Unlike Karnik, not all investors have the resources to invest in global markets nor do they have access to US-listed exchange-traded funds. For such investors looking to diversify overseas, mutual funds provide the opportunity.

WHY INVEST OVERSEAS?
Investing abroad at a time when FIIs are pouring money in India may sound a bit odd. But there is a logic behind this. Given the impact that geo-political events have had on regional markets, diversification makes sense. Besides developed markets offer better avenues of investment.
For instance, opportunity to invest in a search engine, water resources, precious metals mining and clean energy can be easily tapped overseas. These investments are future growth opportunities but they are not available in India.

This diversification within and across asset classes improves the portfolio on the qualitative front. “Diversification of your assets overseas is a must for your portfolio. As a starting point, one could look at parking about 5-10% of one’s portfolio overseas.” Hrishikesh Parandekar, CEO, Karvy Private Wealth.

HOW TO INVEST
RBI permits individuals invest up to $200,000 per year. One can identify various themes or growth drivers before committing money. “GDP growth rates of countries can be an easy yardstick to identify opportunities worldwide, though they has to be seen in the light of other variables,” says Deepak Arackal, vice-president & quantitative investment manager, ING Investment Management India.

Themes such as global energy, global real estate and infrastructure in emerging economies are popular. The best way to tap these themes for the individual investors is mutual funds.

THE FUNDS
The funds operate on multiple models. The first is actively-managed portfolios from India, where the local fund managers buy and sell stocks in foreign markets. Templeton India Equity Income is one of the oldest schemes in this segment.

The second is the fund of funds model. The Indian fund manager invests the money in various funds listed overseas and actively monitors these investments. Quantitative and qualitative parameters are employed to take investment decisions. The third model is a feeder fund model and is a kind of fund of fund. Here the Indian fund invests in a fund listed overseas. Principal Global Opportunities Fund is one of the oldest offering here.

“A fund that offers exposure to markets that have low correlation with Indian markets makes a good option from the diversification point of view,” says Maju Nair, AV-P, Sharekhan. The investor should pick a fund that caters to his needs.

The arrangements of money management at the fund level need not influence the investors’ decision. “But given the taxation treatment, it makes sense to invest in a fund that invests at least 65% of assets in Indian equities and rest in foreign equity,” says an official with an Indian private banking set-up.

WHAT IS ON OFFER?
The Indian mutual fund offerings in this segment are primarily focused on emerging markets equity, energy and commodities worldwide. A look at the adjacent table will give you an idea of the returns generated by such schemes. But there is more to the story than just the returns.
Templeton India Equity Income, a scheme with the longest track record in this category, is managed by Mark Mobius along with Vikas Chiranwal. The scheme invests at least 65% of money in Indian equities and rest of the money is invested in some hand-picked equities across the world.

No wonder the scheme boasts of 14% returns since launch in April 2006 and assets of Rs 1,158.47 crore as on September 30, 2009. On the other hand, top performer, Mirae Asset Global Commodities Stocks Fund, posted 92% returns in one year and invests in the commodity stocks worldwide. The fund was launched in July 2008.

A look at the portfolios of the funds throws up some details of the opportunities the investors can tap. As on September 30, 2009, Reliance Natural Resources Fund had a small exposure to an ETF that invests in water resources, an otherwise difficult to invest theme for an Indian investor.

Sundaram BNP Paribas Global Advantage Fund, on the other hand, boasts of a portfolio comprising 11 fund holdings offering exposures across markets and asset classes. Birla Sunlife International Equity Fund offers two plans, one that invests 65% of the assets in Indian equity and rest overseas and the other that is allowed to invest its entire money in foreign equity.

RISKS
Like any other investments, risks follow returns. Risks related to the geo-political scenario in foreign lands is a key risk and many of us may not be able to read it clearly. “Multiple currency exposures also enhance risks and so is the case with regulatory environment that regulates transparency and compliance levels,” says the official with private banking set-up.

Those who are keen to invest overseas should understand that this may not be just one more vehicle to make more money. A look at the returns connote that many of the funds enlisted here have underperformed the Indian market indices. Hence, the qualitative value addition that bring to your portfolio should be given closer look than just the returns.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/analysis/MFs-can-help-you-reaching-clean-energy-firms/articleshow/5194434.cms