Mahhendra Jajoo, Executive Director & CIO - Fixed Income, Pramerica AMC in an exclusive interview with Harsha Jethmalani of Myiris.com spoke about their newly launched fund and products in pipeline, his views on the FII inflows in the Indian markets, etc.
Mahhendra Jajoo has over 19 years of experience in financial services and capital markets. Prior to joining Pramerica AMC he was working with Tata Asset Management as Head - Fixed Income and Structured Products managing Fixed Income investment/portfolio from June 2008 to Dec.2009. Mahhendra Jajoo has completed his B.Com, ACA, ACS, CFA ( from CFA Institute, USA).
>What is your investment philosophy for debt schemes? Could you throw some light on the structure of your research team?
Our investment philosophy focuses on constructing a diversified portfolio of highly rated instruments with the objective of generating competitive returns within the scheme investment objectives and constraints.
>Pramerica Liquid Fund collected Rs 6.65 billion; what kind of response are you expecting for recently launched Ultra Short-Term Bond Fund? How are you going to target potential investors for the same?
We have seen our AUM increase over the last month as more and more investors consider Pramerica Liquid Fund to meet their investment needs. With further increase in interest rates by the RBI, debt is becoming more attractive. Pramerica Ultra Short Term Fund offers better tax efficiency to investors therefore, we expect many new investors to invest in this fund.
>Can we expect more new product and innovative products from your AMC this year?
Pramerica Mutual Fund aspires to provide innovative products that will help the investors to create wealth. We will launch new as well as innovative products from time to time reaching to retail investors and bringing to them solutions rather than just products. We will also help our investors to bridge the gap between their aspirations and their current financial positions.
We are already managing the Pramerica Liquid Fund and we recently launched our Ultra Short Term Bond on the Sep. 16, 2010. Two other products are lined to be launched in October, although the exact dates have yet to be finalized.
>What is outlook for Rupee, home loans and deposit rates after RBI has raised benchmark interest rates?
Given the strength of Indian economy and continued inflow of foreign investors, we expect rupee to trade with a strengthening bias. Home loan and deposit rates may go up a bit more given the RBI`s current stance of tightening rates.
In the current market scenario, what investment strategy an investor can follow while investing in different kinds of debt/income based funds? If an investor only prefers to invest in debt funds what can be his right portfolio mix.
Presently, short term funds are more suitable as interest rates are still going up and liquidity is tight. Once a clear trend for lower inflation emerges, longer tenor funds may become attractive.
>Where do you see the yields on g-sec heading in the short term?
Given the offsetting factors of likely improved fiscal deficit and higher inflation, we expect g-sec to trade sideways in a narrow range.
>Foreign fund houses have invested over Rs 710 billion (USD 15.6 billion) so far this year and analysts believe that FII investment in stock markets will cross the last year`s record level. What is your take on this?
India is the second fastest growing economy at present. Structural factors will ensure that this trend is maintained in the foreseeable future. India is also, one of the few markets to reach a new high since the fiscal crisis. As global capital searches for high returns, India will remain attractive to FIIs for a long time to come.
Source: http://www.myiris.com/shares/company/ceo/showDetailInt.php?filer=20100923115620707&sec=fm
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Short term bonds funds is a bonds that mature in three years or less. Short-term bond funds are generally made of corporate bonds. Many of such kind of bonds invest in government-backed securities such as treasury bonds and other similar instruments. Corporate bonds are essentially loans to a corporation. They function otherwise like ordinary bonds, but there is a higher risk of default, particularly when buying them in corporations that have weak balance sheets, so at present when market is at high these Funds are performing better.
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