The Hindu Business Line : `Debt segment seems insipid and flattish'

JM Mutual Fund, traditionally identified with the management of debt products, has lately tried to shore up its equity assets by launching a couple of sector-specific schemes. The newly-launched auto and healthcare funds have added to the MF's basket of equity funds, currently made up of only two schemes - JM Equity and JM Basic.

Mr Krishnamurthy Vijayan, CEO of JM Mutual, maintains that equity funds will rule the hearts and minds of investors in the days ahead. "Equity will be the top draw. Not much seems to be happening on the debt front anyway," is his pithy observation.

Excerpt:

Debt is dead, would you say?

It certainly seems insipid and flattish. Look at the returns debt has given in recent days and you will know why I say that it is nothing to write home about. Looking ahead, the outlook is not quite encouraging either. And, no, I can't tell you when the debt market will regain its buoyancy.

Has this affected your debt products?

Well, like other players in the asset management industry, we too have seen clients move out in favour of better alternatives. Institutional investors had started to modify their strategy in tune with the emerging trend. To put it simply, the scenario was beginning to bother them. Retail investors have now joined their league. A considerable amount of money, much of what was activated and mobilised by distributors, has gone out of debt funds.

As for JM MF's own income fund, a number of investors have decided to opt for the long-term floating rate product. I am mostly referring to retail investors here. It seems such floating rate funds have been a hit with a large and influential section of the market.

Has your recent experiment with equity succeeded?

To give you a brief background, we came out with a couple of equity products dedicated to the auto and pharma sectors. (Their net asset values as on October 19 were Rs 10.54 and Rs 11.14 respectively).

However, sizeable inflows into the auto sector fund are yet to be seen... My feeling is that people are generally worried about oil, a concern that is reflected in the kind of money that has come in. As for the pharma fund, the situation is markedly different. Investors seem to be more open to the idea of putting money in it. In fact, the scheme has continued to draw fresh allocations.

At the moment we have two equity schemes, JM Equity and JM Basic. The latter, as you may know, is chiefly invested in the oil & gas sector, its top investments being Reliance Industries, ONGC and Indian Oil.

What's the latest on the proposed JM Hedging Fund?

Well, we have now proposed to introduce it as JM Equity and Derivatives Fund. Only the name has changed and the original idea, as reflected in the offer document sent to the regulator for clearance, has been retained in spirit. We hope to launch it at an opportune moment. The proposed scheme will aim at generating surplus through arbitrage opportunities. Investments will be chiefly in equity and equity related instruments as well as equity derivatives. A part of the assets may also be invested in fixed income securities.

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`Debt segment seems insipid and flattish'