The Hindu Business Line : `Segmentation has lately taken place in the market for MFs'

MR TRIDIB PATHAK, the soft-spoken CIO of Cholamandalam MF, has no two opinions about companies that generate a part of their business from outside India. "Theirs is a burgeoning community. Some of these companies have already made their presence felt in international markets. Others are set to join their league," he told Business Line.

Excerpts from the interview

Give us a sense of your recent activities in the market...

Let me tell you about Chola Growth, the fund with large-cap holdings that we have in our stable. We have lately tinkered with its IT exposure. Our team has been diligently monitoring the offshoring-outsourcing story, which is rapidly entering the mainstream.

Generally speaking, our funds tried to make use of the last result season to increase their holdings in stocks that we think are critical. We added to our holdings in ONGC and Reliance. Both are being watched closely.

Let me tell you here that performance of companies in the mid-cap space is being keenly monitored as well.

How is Chola Opportunities, the former IT-specific fund, doing now?

Well, IT still contributes a key part - about 40-45 per cent - of its portfolio. We are consciously overweight here. This has been, ever since it was re-structured and re-named, positioned as a high-growth scheme, one that seeks to generate capital appreciation over the long term. The focus is on a few select sectors.

How will you position your latest product?

Chola Global Advantage will follow a diversified approach, picking up companies that generate at least 20 per cent of their business from outside India. The point to be noted here is the sheer increase in the number of companies that will now fit the bill.

There is a marked difference between what we had seen even a few years ago and what we are witnessing today. The global story has leapfrogged beyond IT, pharma and the like.

Players operating in such dowdy sectors like cement have started meeting the main selection criterion too. The likes of UltraTech and Gujarat Ambuja are currently active on the overseas front. In fact, there is a universe of over 120 companies - this came from a study we did recently - that can be covered by Chola Global Advantage. That also means it can invest in companies doing business in as many as 10 or 12 different sectors. At the cost of repeating myself, let me affirm this represents a marked shift.

One gets the feeling there are too many equity funds with confusing names. Your comments.

What you suggest is not incorrect. But consider this - a considerable degree of segmentation has lately taken place in the market for mutual funds. I am referring to the many funds products have proliferated on the back of the demand thrown up by the investment community.

You have multi-cap ideas that stick to the philosophy of not adhering to a specific market capitalisation segment, while mid-cap funds follow a distinct style of their own within their chosen range.

Investors, you will appreciate, should be given a wide basket of products to choose from. The fact that an equity fund is simply `diversified' in nature may not be enough to attract them any more. I suppose all this is part of a process of evolution, one that is advancing rapidly.

And it actually makes the business of asset management an interesting affair.

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`Segmentation has lately taken place in the market for MFs'