ET NOW talks to S Naren, CIO Equity, ICICI Prudential AMC.
We have seen fresh mutual fund inflows on equities kind of languish in 2009 as we step into 2010 do you think the situation is going to reverse itself?
S Naren: I mean if investors are taking out money for profit booking I think it is welcome because we have seen one of the highest rise apparently in 18 years in the index so that part of it would be welcome. People are taking out money to invest in product where the costs are much higher I think than it would not be welcome. What we are hoping for in 2010 is that there are much huge inflows into SIPs because that's our wish because we believe that SIPs would be a very very attractive way to collect money, to invest money from these levels over a period of time and with no entry loads the costs are also much lower so we believe that there is good scope for people to look at investing through SIPs which has not been fully utilised in my opinion to the extent that it should be of course we also are optimistic that tax plan collections in 2010 will be much better because you know the first investment for most investors in mutual fund should be a tax plan given the kind of tax concessions which are available through the ETC route this is what as our hope for 2010.
So you are expecting Jan to March quarter to be the one where ELSS schemes will see fresh inflows for you what kind of numbers are you looking at right now?
S Naren: Yeah, we specifically don't look at numbers our interest is that we invest the money that we collect in a stocks and sectors where we think we will get good risk adjusted returns that is our focus rather than collecting money from the investment side. I think overall if you see the situation last year and this year the situation in the employment market all these situations is much better. So last year was a down year in one sense for the last quarter investment cycle but because at the way the markets were at that point of time but this year the environment being much better the potential for (17:50) flows is much better than what we would have expected in 2009.
So stepping in a 2010 portfolio profiles which sectors would you like to stay invested in, which ones would you like to avoid?
S Naren: Our broad belief if you study the Indian economy the consumption side of the economy has done extremely well in the year 2009. Our belief is that in 2010 there would be a increase taxation on the consumption side of the economy to fund investment in infrastructure so what we believe is an investment in infrastructure through the year or should actually yield good returns because if infrastructure investment does not pick up over the next two to three years then lot of constraints will develop and inflation would also go higher. We also believe that many of the sectors which are in exports will do much better over (18:50) course of the next two to three years than what we have seen in the last two years. So we believe from an equity market angle people have been less focussed on export industry and therefore we see much better opportunities in this area. From a value perspective of course we have been recommending telecom and we see a good opportunity in telecom because the sector has underperform the market, we are seeing competitive intensity at its highest at this point of time and therefore the opportunity is much higher in telecom for long term investment than in many of the other sectors in the economy.
One quick word on technology as a pack you have Infosys a top holding in your tax plan fund it is a space you have liked you have liked it has performed very well for you, would you still like to stay invested there?
S Naren: We would love to stay invested there but I think there returns are that we expected some part of the return has already come in may be front ended but we see the opportunity for export oriented sectors like technology to be very good in 2010 and 2011 and therefore we would like to stay invested whether we trim a part of it and reduce a weightages from a tactical perspective these are things we could still look at doing but overall I would say technology is a pack is likely to do well over the next two years the entire business environment has turned out to be a much better than what even the optimistic felt six months back.
Source: http://economictimes.indiatimes.com/Markets/Stocks/Views/Recommendations/Huge-inflows-into-SIPs-expected-in-2010-ICICI-prudential/articleshow/5399260.cms?curpg=2
We have seen fresh mutual fund inflows on equities kind of languish in 2009 as we step into 2010 do you think the situation is going to reverse itself?
S Naren: I mean if investors are taking out money for profit booking I think it is welcome because we have seen one of the highest rise apparently in 18 years in the index so that part of it would be welcome. People are taking out money to invest in product where the costs are much higher I think than it would not be welcome. What we are hoping for in 2010 is that there are much huge inflows into SIPs because that's our wish because we believe that SIPs would be a very very attractive way to collect money, to invest money from these levels over a period of time and with no entry loads the costs are also much lower so we believe that there is good scope for people to look at investing through SIPs which has not been fully utilised in my opinion to the extent that it should be of course we also are optimistic that tax plan collections in 2010 will be much better because you know the first investment for most investors in mutual fund should be a tax plan given the kind of tax concessions which are available through the ETC route this is what as our hope for 2010.
So you are expecting Jan to March quarter to be the one where ELSS schemes will see fresh inflows for you what kind of numbers are you looking at right now?
S Naren: Yeah, we specifically don't look at numbers our interest is that we invest the money that we collect in a stocks and sectors where we think we will get good risk adjusted returns that is our focus rather than collecting money from the investment side. I think overall if you see the situation last year and this year the situation in the employment market all these situations is much better. So last year was a down year in one sense for the last quarter investment cycle but because at the way the markets were at that point of time but this year the environment being much better the potential for (17:50) flows is much better than what we would have expected in 2009.
So stepping in a 2010 portfolio profiles which sectors would you like to stay invested in, which ones would you like to avoid?
S Naren: Our broad belief if you study the Indian economy the consumption side of the economy has done extremely well in the year 2009. Our belief is that in 2010 there would be a increase taxation on the consumption side of the economy to fund investment in infrastructure so what we believe is an investment in infrastructure through the year or should actually yield good returns because if infrastructure investment does not pick up over the next two to three years then lot of constraints will develop and inflation would also go higher. We also believe that many of the sectors which are in exports will do much better over (18:50) course of the next two to three years than what we have seen in the last two years. So we believe from an equity market angle people have been less focussed on export industry and therefore we see much better opportunities in this area. From a value perspective of course we have been recommending telecom and we see a good opportunity in telecom because the sector has underperform the market, we are seeing competitive intensity at its highest at this point of time and therefore the opportunity is much higher in telecom for long term investment than in many of the other sectors in the economy.
One quick word on technology as a pack you have Infosys a top holding in your tax plan fund it is a space you have liked you have liked it has performed very well for you, would you still like to stay invested there?
S Naren: We would love to stay invested there but I think there returns are that we expected some part of the return has already come in may be front ended but we see the opportunity for export oriented sectors like technology to be very good in 2010 and 2011 and therefore we would like to stay invested whether we trim a part of it and reduce a weightages from a tactical perspective these are things we could still look at doing but overall I would say technology is a pack is likely to do well over the next two years the entire business environment has turned out to be a much better than what even the optimistic felt six months back.
Source: http://economictimes.indiatimes.com/Markets/Stocks/Views/Recommendations/Huge-inflows-into-SIPs-expected-in-2010-ICICI-prudential/articleshow/5399260.cms?curpg=2
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