The Hindu Business Line : `Even the man on the street has focused too much on equity'

The current excitement about equity has for some sections erased the shine off debt funds, which are no longer delivering the kind of returns they used to provide earlier. Mr Suresh Soni, Head - Fixed Income, Deutsche MF, is only too aware of this.

He, however, states in no uncertain terms that debt, at least partially, will still remain evergreen for many classes of investors.

Excerpts.

Where is fixed income headed this fiscal?

There may not be too many surprises in store for the average investor, but a few interesting facts about the market can be particularly underlined.

One, there has been a very high level of credit off take, which currently stands out in a significant manner when compared to earlier years. Two, signals emanating from the broad parameters - inflation, oil prices and the like - are quite discernible and are as usual being closely followed by the investment fraternity. At the same time, the market is yet to shake off all the effects of the post-IMD redemption fallout.

How will these factors drive returns?

These may not be out of sync with what most of us expect. That said, let me state that debt funds continue to aim at managing risk in the most optimum manner. These funds had indeed provided big returns in the past, something that not many investors have forgotten.

The market's expectation is scaled down in the current situation.

With equity exuding buoyant sentiments, debt seems to have lost a battle...

That may be the case at the moment. The point is it has not lost the war! For investors - perhaps not all, but certainly many categories will be included here - debt will help in balancing their asset allocation. I fear that even the man on the street has focused too much on equity.

This has happened even more blatantly in the past couple of years or so. While that does not leave much room for debt to play a major role in allocations, a sudden downturn on the equity side may create huge problems.

You already have a liquid product. How will your latest scheme be positioned differently?

Deutsche Money Plus, as the fund has been named, will be benchmarked against the commonly used liquid fund index. But the idea here is to create a product differentiation of sorts.

The fund will aim at steady returns through investments in debt and money market instruments. It will try to provide moderate liquidity over the short to medium term.

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